Greece Goes Broke

[Derek 2.0]

Polls close in just over 1/2 hour, as so far, it looks as if the "no" side is in the lead.........

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A German news crew was attacked by a mob in Athens

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Greece has run out $20 Euro bills, reducing the $60 Euro daily withdrawal cap to $50......

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Final results should start coming in around 11am PST......buckle-up

Edited July 5, 2015 by Derek 2.0

[WWWTT]

Here's some real irony into all of this!

https://www.facebook.com/solidaritywithgreece/photos/a.1681903648696778.1073741828.1681857028701440/1683234281897048/?type=1&hc_location=ufi

Germany should do the right thing and accept responsibility for the problems their countries people have caused!

WWWTT

[sharkman]

At the end of the day, the debt doesn't care whose fault it is. It's going to take down Greece unless it gets dealt with. And Greece has put off dealing with reality for so long that their options are pretty limited. The Greek banks response? Reduce the daily amount of cash that can be reduced by account holders. That means they won't run out of cash until Tuesday, so they've given themselves two extra days until the ATM's are empty. That's a perfect illustration of how out of touch the decision makers are.

Edited July 5, 2015 by sharkman

[Derek 2.0]

Time to dump my olive oil futures.......

Very early results indicate the 'no' side is on track to win Greece's referendum on whether the EU country will accept the tough creditor conditions attached to loans needed to avoid default and a banking collapse.

[WIP]

Okay folks, as of this instant, No leads by more than 60% to 38% with almost 60% of ballots counted.

http://ekloges.ypes.gr/current/e/public/index.html?lang=en#{%22cls%22:%22main%22,%22params%22:{}}

All that's left is for the fat lady to warm up and start singing! I don't know whether Syriza will have the balls to reject austerity and deal with Grexit, but a conclusive No vote gives them the leverage they need to do it. So much for western and Greek oligarch-controlled media that were predicting a yes vote and trying to discourage and drive down voting numbers in Greece.

[jbg]

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.

I'm sure they have drachae in the vault.

For me, the real question is whether bankers make the same inquiries of countries as they do businesses as to the intended purpose of the loans. Government loans are not backed by the usual credit strictures as collateral or personal guarantees. It's a built-in moral hazard; every incentive to borrow and none to repay, other than the ability to borrow more.

[Argus]

So what happens now? Aside from more turmoil in the stock markets? From what I've read there is very, very little enthusiasm among the rest of the Eurozone for giving Greece more money, and even less enthusiasm in their current, nutty government. Even the previous government made promises of financial and economic reforms it failed to deliver on. This one hasn't even tried, and is pretty defiant about having no intention of doing so. Instead they seem enraged that anyone expects them to try and make Greece a going concern in exchange for 'loaning' them more money.

A new offer would require all eighteen other EU leaders vote in favour of. From what I understand, there's virtually no chance of that. Everyone knows that if they cut Greece more slack the Greeks will just use it to ignore their responsibilities. If they renegotiate the debt downward then Spain, Italy, Ireland, Portugal, Bulgaria and the rest will be knocking at the door tomorrow demanding they be allowed out of more of their debt, too. And if refused, well, most of them have crazy right wing or left wing political groups eager to take over and repudiate their austerity measures and play brinksmanship too.

Greece never should have been admitted to the EU in the first place. They cooked the books to make it look like they qualified and have never come close to keeping within the economic rules set by the EU. They're a disorganized, corrupt basket case, much more of a third world country than a western nation. They'll probably be bounced out of the EU, but given some kind of lifeline to keep the place from turning into a European Somalia.

Edited July 6, 2015 by Argus

[Derek 2.0]

They'll probably be bounced out of the EEC, but given some kind of lifeline to keep the place from turning into a European Somalia.

I've read a Dutch ministers remarks, in which he states the rest of the Euro zone will have to start considering a humanitarian aid package for the Greeks....

[Argus]

I've read a Dutch ministers remarks, in which he states the rest of the Euro zone will have to start considering a humanitarian aid package for the Greeks....

Probably. Their banks have no Euros except what the European central bank sends them. Their government needs to start printing up drachmas again and fast. But from what I've been reading, converting to a new currency is something which takes a lot of careful planning over time, and the Greeks have done nothing. What really needs to happen is for the Greek government to be booted out and an external management company come in and start doing what needs doing.

[cybercoma]

Everyone knows that if they cut Greece more slack the Greeks will just use it to ignore their responsibilities.

Kind of like Germany every single time they've owed on debts in the last 100 years. They have never repaid their debts, ever. Not a once. And look at what happened. They were able to recover far quicker in the 20th century by than the UK who took nearly 100 years to recover from the debts of the Napoleonic Wars. For generations they paid 2-3% of their GDP to their debts. Imagine that money invested into healthcare, education, retirement support, infrastructure, etc. Germany on the other hand never had to repay its debts. You know why? Spain and Greece, amongst others, forgave them. You know what happened to Germany? They recovered in a generation.

Read this article: http://www.theguardian.com/commentisfree/2013/feb/27/greece-spain-helped-germany-recover?CMP=share_btn_fb

Germany emerged from the second world war still owing debt that originated with the first world war: the reparations imposed on the country following the Versailles peace conference in 1919. ... Germany's creditors included Greece and Spain, Pakistan and Egypt, as well as the US, UK and France. ... Germany was given large cancellation of 50% of its debt. The deal covered all debts, including those owed by the private sector and even individuals. It also covered all creditors. ... West Germany experienced an "economic miracle", with the debt problem resolved and years of economic growth. The medicine doled out to heavily indebted countries over the last 30 years could not be more different.

And that's where we are today. Ignoring the lessons of the past and demanding austerity measures that will cripple Greece from any meaningful recovery, but instead filling the pockets of the banks who we're seeing time and time again cannot be trusted not to destroy economies for short-term gains. If people were actually interested in fixing Greece, instead of punishing Greece, this problem would be solved in a matter of years. Instead of learning lessons from the past, however, we're operating on faulty assumptions that austerity will fix crisis economies. It never has and it never will.

Edited July 6, 2015 by cybercoma

[Shady]

You can't intellectually compare Germany to Greece. Two distinctly different societies. One in which productivity is high and entitlements are modest and taxes are actually collected. Greece is the exact opposite.

[bush_cheney2004]

Greece has been a basket case for a very, very long time, going back to rule by the Ottoman Empire. Chaos is normal.

Greece has survived one way or another through far worse circumstances.

[cybercoma]

Here's what Robert Reich posted about Greece today:

Five things you need to know about the Greek debt crisis as of now:

1. The Greek people voted correctly yesterday in rejecting more tax increases and spending cuts. They've already been punished too much by their creditors -- mostly big banks, as represented by the IMF, European Central Bank, and European Commission.

2. Austerity was the wrong medicine to begin with. It put Greece into a death spiral of economic woe that worsened its debt crisis.

3. Now it's up to the rest of Europe to respond. It's in its interest to offer Greece easier bailout terms, and then help Greece get to work on what Greece has already agreed to do -- reform its tax system so that wealthy Greeks can't escape taxation, and reform its budget process to avoid political payoffs.

4. But if Europe doesn't respond, the best of the worst cases to follow would be for Greece to withdraw from the euro. That will happen automatically if Greek banks issue IOUs instead of euros (cash is already being rationed), and those IOUs become, in effect, a different currency.

5. There could be "contagion" to Spain, Portugal, Ireland, and Italy if creditors fear future defaults and the incapacity of the eurozone to govern itself economically. That would hurt the United States, especially Wall Street, whose exposure to European banks is still considerable.


Edit: Added link.

Edited July 6, 2015 by cybercoma

[WIP]

Probably. Their banks have no Euros except what the European central bank sends them. Their government needs to start printing up drachmas again and fast. But from what I've been reading, converting to a new currency is something which takes a lot of careful planning over time, and the Greeks have done nothing. What really needs to happen is for the Greek government to be booted out and an external management company come in and start doing what needs doing.

They also need their own central bank! I noticed over the weeks, from following the Greek financial crisis occasionally that a lot of Tsipras&Varoufakis critics did not believe that they were serious about refusing the Troika's final offers....mostly because they had not taken any steps towards creating their own currency system.

No doubt that any steps along the way would have been noticed by the Greek oligarchs and their foreign friends, who would taken all of what remains of their cash in Greek banks with them to Switzerland or wherever!

But, if they intended to reject the continued death spiral of austerity demanded by the EU, they should have realized that it's not really about the money...which is mostly created out of thin air every time the bankers write up new loans.

Instead it is becoming clear that Europe itself is faking their way through solvency and is actually bankrupt. Up till now the game of loading up usually third world dictatorial governments with IMF loans that they can't possibly repay has mostly been played out with third world nations , is to drive them into insolvency and demand hard assets from the country to pay for fake virtual assets. All that's new here is that Europe is cannibalizing itself to maintain the values of its banking institutions.

Once the IMF, Euro Central Bank and the European Commission were done picking over the bones of Greece, it would be on to the next victim: Spain, Italy, Ireland, England, France....if allowed to continue nonstop, there would be a handful of oligarchs owning all of the real assets in Europe, while most of the populations would be left destitute.

Looks like Greece has fired the first shot against the Euro-establishment and the whole thing is likely to fall apart in a few years. It'll be interesting to see what's left. And just as interesting to see what happens when it's realized that all of the fake billions of dollars worth of money have grown to large for the entire global economies to absorb. This has been a system that was destined for failure at least 100 years ago, because as money became detached from real assets and was allowed to grow exponentially, the time when real economies could not extract, manufacture and consume enough to absorb all of the new money would eventually arrive.

What to do now? Buy gold (real gold and have it in your possession if possible) or silver or learn how to trade and barter with your neighbours really quickly, because the time when money has no discernible value left is approaching on the horizon. In the meantime, most of the clear-thinking financial advisers I've read on the issue of late, make the point that you should take out as much cash as possible, because all of your bank accounts and assets could be held in some sort of "bail-in" scheme" like the EU already made a test run on in Cyprus.

Edited July 6, 2015 by WIP

[WIP]

You can't intellectually compare Germany to Greece. Two distinctly different societies. One in which productivity is high and entitlements are modest and taxes are actually collected. Greece is the exact opposite.

Really! Germany in fact, has a larger and more expansive social safety net than Greece has ever had. In fact, my eldest son decided to go to Germany to finish his education not only to learn German, but more importantly because German university education is free for their citizens and much cheaper for foreign students than the comparable education here in Canada!

[Argus]

You can't intellectually compare Germany to Greece. Two distinctly different societies. One in which productivity is high and entitlements are modest and taxes are actually collected. Greece is the exact opposite.

The real difference is in governance. The plain and simple fact is that unless you get the Greek's to reform their spending, forgiving some or even all their debt will just encourage them to continue on the way they are. I guarantee you that if Greece's debt was 100% eliminated tomorrow they'd hire more public servants, lower taxes, raise pensions, start borrowing money again immediately.

[Derek 2.0]

What really needs to happen is for the Greek government to be booted out and an external management company come in and start doing what needs doing.

If by "external management company" you mean a cadre of Hellenic Army Generals (yet again) booting the Government, especially if the current Government moves closer to Russia, then I wouldn't discount that possibility......I'm sure, like other Greeks, Constantine II is unemployed and could dust off his robes and crown.

[Derek 2.0]

I've read a Dutch ministers remarks, in which he states the rest of the Euro zone will have to start considering a humanitarian aid package for the Greeks....

And from the Mountain top:

Following a day’s worth of talks aimed at finding a way out of months of bitter deadlock, European leaders were scathing in their assessments of Greece’s proposals, calling them inadequate and demanding the Greek government return with a detailed plan by Thursday.

The leaders of all 28 European Union members will then meet Sunday in what officials said will be the final chance to save Greece from economic oblivion — or the moment the country is ejected from the euro zone.

And from there, the countdown will begin as to when other members (Portugal, Spain, Italy, Ireland?) leave the sinking ship.....or are tossed overboard.

“The stark reality is that we only have five days to find the ultimate agreement,” said a visibly irritated Donald Tusk, the European Council president. “Until now I have avoided talking about deadlines. But tonight I have to say it loud and clear — the final deadline ends this week.”

Standing at his side at E.U. headquarters in Brussels, European Commission President Jean-Claude Juncker pounded the lectern as he announced that Europe has detailed plans for Greece’s exit from the euro zone — known as “Grexit” — and for delivering humanitarian aid to Athens.

When it gets to that point, food and medical aid being sent to Greeks, I then fully expect the current Socialist Government to fall and not be replaced by a different party, but by a middle aged Greek wearing olive drab and shoulder boards........

Despite the years of forced austerity, the Greek military has been ring fenced from major cuts, and not because Greek politicians fear the Turks or Albania.....

Edited July 8, 2015 by Derek 2.0

[Bryan]

You can't intellectually compare Germany to Greece. Two distinctly different societies. One in which productivity is high and entitlements are modest and taxes are actually collected. Greece is the exact opposite.

Not only that, but Greece has already had over 50% debt forgiveness on multiple occasions. It already is pennies on the dollar that they are currently defaulting on.

[dre]

The real difference is in governance. The plain and simple fact is that unless you get the Greek's to reform their spending, forgiving some or even all their debt will just encourage them to continue on the way they are. I guarantee you that if Greece's debt was 100% eliminated tomorrow they'd hire more public servants, lower taxes, raise pensions, start borrowing money again immediately.

Greek spending is in line with the rest of the EU. You keep repeating this meme as if its true but it isnt.

[Michael Hardner]

Greek spending is in line with the rest of the EU. You keep repeating this meme as if its true but it isnt.

I get that, but doesn't this point mean nothing if their revenue was not in line ?

[cybercoma]

I get that, but doesn't this point mean nothing if their revenue was not in line ?

It means that their programs weren't profligate as Argus and Shady have been arguing. It means that they have a problem with tax compliance and enforcement not social spending. Conservatives like the aforementioned posters want to blame the programs because it fits with their ideological biases, but their spending as compared to their GDP is not out of control. What's out of control is people refusing to pay taxes. New austerity measures will only make that worse because people are going to be less likely to want to pay taxes. Essentially, the Trioska continues to engage in a massive redistribution of wealth from people who had nothing to do with the economic crisis that destroyed the country (2008 wasn't the work of the working class) to bankers who are forcing these "loans" onto Greece. This will only be fixed by Greece exiting the EU and Germany (and others) returning the favour Greece bestowed upon them, i.e., forgiving a significant amount of the debt. Austerity will increase inequality in Greece and do nothing to stimulate the economy. The terms are also impossible to meet: +1.5% growth year 1, +2.5% year 2 and +3.5% year 3. Imagine... 3.5% increase in GDP in a bankrupt nation. Our GDP has been negative for months now. The Trioska is just going to milk Greece dry and those kids who don't have jobs now are going to be even worse off.

Edited July 9, 2015 by cybercoma

[dre]

I get that, but doesn't this point mean nothing if their revenue was not in line ?

Well if they didnt have so much revenue going towards interest payments it would be in line. So the claim that "even if the debt was forgiven" is not true. In any case though, over and over this is portrayed as a spending problem and people keep trotting out the whole "lazy entitled greeks" meme which isnt true.

[Smallc]

If you can't control revenue, you have to control spending. It's a spending problem and a revenue problem.

[-1=e^ipi]

out the whole "lazy entitled greeks" meme which isnt true.

Most Greeks retire in their 50's, while Germans retire at 67.