Greece about to default

[bluechris]

Guys i watch this thread closely and as a Greek i think you need to learn some facts.

1. Greece the last 5 years with the current programs got 1.5 million unemployed people in the private sector in a country of 10 millions. From them in ages 25-35 which are the most productive age the unemployed are 50%

2. The people who work for the government lost 30-40% from their monthly payments (average monthly paycheck approximately at 900€).

3. The pensions reduced by 30% (average monthly pension approximately at 700€).

4. The Greek debt went from 120 billion Euros in 2009 to 320 billions in the end of 2014.

5. The IMF many years say open that the debt is not payable and a cut is needed and lately US and IMF said that officially.

6. Greece is in an area with crucial geostratigical location and the last years there is a yearly cut in the military expenses making the army/navy/airforce to loose power.

7. We got the last years more than two million of refugees from everywhere and lately this number grows constantly because of the middle east and ISIS. In all this Europe doesnt want noone to leave Greece and we try to help them.

I will try to write what is my thinking of what the current government tried to do the last months tommorow.


Edit: This site here has more info of what really happened in Greece with the austerity measures.

 

[werepossum]

Germany finally took over europe. You gotta give them props. 3rd time is a charm.

lol Yeah, but watch our for the law of unintended consequences. Now that Germany has taken over Europe, they are expected to put the entire continent on the dole for ever after.

 

[senseamp]

The ECB is trying to direct all the Eurozone countries in the direction of Germany and its core neighbors, and that means not being acomodative to France or Italy, let alone Greece or Portugal. Were the ECB acomodative to these countries they wouldn't never reform. These countries have a history of correcting their fiscal imbalances through devaluation, when they got into the Euro they lost this lever, so they either become like Germany (export-oriented economy, highly competitive, etc) or they will get impoverished as the time passes. They need reform.

But what if the ECB listened to Krugman and went heavy on Euro devaluation in order to save Greece and the others? German exports would become even more competitive, which means higher trade surplus and an Euro revaluation in the medium term. So here we are with the structural problem again. Another exit would be for Germany to spend more of its trade surplus, but that would just soften the structural problems of the Euro periphery, not solve them.

In the end, since political/fiscal union is not on the cards, I don't think the Euro has much hope outside structural reforms or a gradual expulsion of the laggards.

You can't have everyone either export-oriented or impoverished, because then who is going to have money to buy the exports?
The money loop has to close one way or another, either through fiscal stimulus, through debt + bailout cycles, through buying of importer's currency if it's different from yours.
Once you expel the current laggards, they will devalue and become more competitive than those who stay in the now even more overvalued Euro, and one of the remaining Euro states will take the place of the laggard, and eventually you will just expel everyone.

 

[senseamp]

lol Yeah, but watch our for the law of unintended consequences. Now that Germany has taken over Europe, they are expected to put the entire continent on the dole for ever after.

If you want to export, you have to put someone on the dole. We are on China (and Japan's) dole. They buy up our dollars to devalue their money (labor) so we can buy their exports. Germany thinks it's exempt from basic math, that it can run permanent current account surpluses without paying for them one way or another. This is a failure of German politicians who never presented the other side of the exporter state bargain to their people. If you want to produce more than you consume, someone will have to consume more than they produce.

 

[Darwin333]

Denninger's words, not Tsipras', and Denninger is an idiot. If changing the party in power invalidated loans, there would be no more loans to governments, period. And if taking out a loan you can't repay constituted lender fraud which meant you didn't have to repay the loan, there would be no more loans, period. Greece would be the first and hardest hit of nations by such a policy and currently cannot pay its bills, so effectively such a policy would crash Greece like a lead balloon launched from space. That letter is such a vacuous creation that one wonders if Greece crashing is Denninger's preference.

It's either that or Greece will eventually default completely.

 

[mrmt]

Guys i watch this thread closely and as a Greek i think you need to learn some facts.

And that's why Grexit is the logical course of action, but it seems the current Greek government is not competent enough to push this solution.

 

[werepossum]

If you want to export, you have to put someone on the dole. We are on China (and Japan's) dole. They buy up our dollars to devalue their money (labor) so we can buy their exports. Germany thinks it's exempt from basic math, that it can run permanent current account surpluses without paying for them one way or another. This is a failure of German politicians who never presented the other side of the exporter state bargain to their people. If you want to produce more than you consume, someone will have to consume more than they produce.

That assumes it is a net zero equation. Ideally nations produce and consume the same amounts of wealth; as long as wealth is being created, everybody wins, since even if they consume more than they produce for a short time they are still ahead of the game as long as the imbalance isn't greater than the wealth produced. But there is no economic model that can make sensible paying someone to buy your goods. Under that scenario, defining producing more than you consume as some sort of offense, the only way to win is to be Greece, living on others' sweat. Do we want to live in a world that punishes hard work and high productivity and rewards laziness and low productivity? If we determine social debt by succeeding, that's exactly what we create, a world in which each nation is better off closing its borders and selling to no one.

There's another aspect here as well - foreign investment. Both China and Japan now own a ton of American real estate and companies because of our trade deficit. We aren't on their dole, we are selling them the farm. Is that something we should recommend to Greece? Should Germany continue loaning money to Greece until all of Greece is actually owned by Germany? How is that good for Greece?

It's either that or Greece will eventually default completely.

Could be. But defaulting completely is preferable to just bleeding dry nations in perpetuity, since defaulting completely at the least requires the defaulting nation to live on its own resources. The concept that "I don't have to repay my loan because it's fraud to loan money to a deadbeat like me" is simply insane and if accepted, will kill lending completely.

 

[mrmt]

http://www.bloomberg.com/news/articles/2015-07-14/tsipras-begins-to-sell-aid-terms-as-debt-outlook-worsens

Greece “does not have the required currency reserves to support a return to the drachma,”

Can't believe the amount of incompetence.

 

[senseamp]

That assumes it is a net zero equation. Ideally nations produce and consume the same amounts of wealth; as long as wealth is being created, everybody wins, since even if they consume more than they produce for a short time they are still ahead of the game as long as the imbalance isn't greater than the wealth produced.
But there is no economic model that can make sensible paying someone to buy your goods. Under that scenario, defining producing more than you consume as some sort of offense, the only way to win is to be Greece, living on others' sweat. Do we want to live in a world that punishes hard work and high productivity and rewards laziness and low productivity? If we determine social debt by succeeding, that's exactly what we create, a world in which each nation is better off closing its borders and selling to no one.
There's another aspect here as well - foreign investment. Both China and Japan now own a ton of American real estate and companies because of our trade deficit. We aren't on their dole, we are selling them the farm. Is that something we should recommend to Greece? Should Germany continue loaning money to Greece until all of Greece is actually owned by Germany? How is that good for Greece?

It still doesn't change the fact that if you want to produce more than you consume, then someone else has to consume more than they produce to balance the trade.
Germans should understand that. If they want to work less and live it up more, to narrow the trade surplus, that's an option. Expecting to indefinitely run a trade surplus without paying for it, one way or another, is not.
If they want to use the money they earn through exporting to buy real estate in Greece, pay property taxes, and spend money on maintenance, vacationing, that may actually help close the money loop. I see it more as a solution than a problem.

 

[CWRMadcat]

http://www.imf.org/external/pubs/ft/scr/2015/cr15186.pdf

Interesting IMF report for anyone still interested in this debacle.

 

[chucky2]

It still doesn't change the fact that if you want to produce more than you consume, then someone else has to consume more than they produce to balance the trade.
Germans should understand that. If they want to work less and live it up more, to narrow the trade surplus, that's an option. Expecting to indefinitely run a trade surplus without paying for it, one way or another, is not.
If they want to use the money they earn through exporting to buy real estate in Greece, pay property taxes, and spend money on maintenance, vacationing, that may actually help close the money loop. I see it more as a solution than a problem.

Why can't you produce more than you consume and your production is consumed by multiple other countries, and not just one that must somehow consumer more than they produce?

 

[senseamp]

Why can't you produce more than you consume and your production is consumed by multiple other countries, and not just one that must somehow consumer more than they produce?

Simple math dictates that if one country produces more than it consumes, there must be at least one country that consumes more than it produces, since total production equals total consumption.

 

[PingviN]

Guys i watch this thread closely and as a Greek i think you need to learn some facts.

I don't think the facts of Greece's shitty economy is in dispute here, the question is why you (Greeks) think Europe should foot the bill for your leaders incompetence.

When your pensions are hovering around €200, like they are in the Baltics, I guess we can discuss why someone else should pay for your standards of living.

 

[AtenRa]

I don't think the facts of Greece's shitty economy is in dispute here, the question is why you (Greeks) think Europe should foot the bill for your leaders incompetence.

Because it was your government and the rest of the EZ that demanded Greece to take all those austerity measures in the first place that completely destroyed the economy and created a 25%+ unemployment.

When your pensions are hovering around €200, like they are in the Baltics, I guess we can discuss why someone else should pay for your standards of living.

Did those people in the Baltic countries payed the same money as the Greek pensioners for their pensions ??? Because i see lot of people saying that Greek pensions are high but they dont take in consideration that Greeks payed handsomely in order to get those high pensions.

 

[PingviN]

Yeah, if you want bailouts, you need to show you're serious in trying to get the deficit under control. Don't want to take austerity measures? Don't spend money you don't have.



What does it matter what you paid and they paid when they can afford their pensions and you can't? Frankly, I don't give two fucks in a basket how much you spend on pensions as long as you can afford it. You can't.



Also, Sweden is not in the EZ, which you might want to keep in mind if you're going to play the blame game. We took our austerity measures after our financial collapse in the '90s.

 

[Charmonium]

http://www.imf.org/external/pubs/ft/scr/2015/cr15186.pdf

Interesting IMF report for anyone still interested in this debacle.

From the report

The dramatic deterioration in debt sustainabi lity points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM. There are several options. If Europe prefers to again provide debt relief through maturity extension, there would have to be a very dr amatic extension with grace periods of, say, 30 years on the entire st ock of European debt, including new assistance. This reflects the basic premise that debt canno t be assumed to migrate back onto the balance sheet of the private sector at interest rates clos e to the current AAA rates before debt levels have been brought to much lower levels; borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for th e next several decades. Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide

Extending maturities by 30 years would obviously amount to a serious haircut. So it looks like the EU will be taking it up the ass one way or the other.

 

[MongGrel]

And that's why Grexit is the logical course of action, but it seems the current Greek government is not competent enough to push this solution.

That whole Grexit thing really kills me.

John Oliver even made a point of mentioning it, how lame and Brangelina weird.

"At the end of the day, we'll have a Grexit"

Throw Tsunami in there somewhere, you can say other words and phrases way used too much.

 

[AtenRa]

Yeah, if you want bailouts, you need to show you're serious in trying to get the deficit under control. Don't want to take austerity measures? Don't spend money you don't have.

Greece is among the highest ranking countries in EU, if not the highest, with number of reforms taken the last 3-5 years.

What does it matter what you paid and they paid when they can afford their pensions and you can't? Frankly, I don't give two fucks in a basket how much you spend on pensions as long as you can afford it. You can't.

The pension system collapsed due to the high unemployment created by all those austerity measures taken by the EU and enforced to Greece. Now the EU will have to pay for its actions.
You cannot force someone to destroy its economy and then left him alone, you have to help him stand on his own feet again.

 

[Charmonium]

Throw Tsunami in there somewhere, you can say other words and phrases way used too much.

I'd go with Grecnado. That's where bankers who are half man half shark, created by underground Nazi experiments, are sucked up out of the Mediterranean by a cyclone and descend upon Greece eating up all of the money. The only hope of salvation is from the intervention of a list of B-movie actors armed with flame throwers. They save Greece by killing all of the mutant sharks but also destroy Greece by burning all of the money.

edit: don't forget, Sharknado3 is coming to set top box near you soon.

 

[PingviN]

Greece is among the highest ranking countries in EU, if not the highest, with number of reforms taken the last 3-5 years.

The pension system collapsed due to the high unemployment created by all those austerity measures taken by the EU and enforced to Greece. Now the EU will have to pay for its actions.
You cannot force someone to destroy its economy and then left him alone, you have to help him stand on his own feet again.

Greece is reforming due to austerity put in place. Reforms for loans. Still not enough, though things were looking up before Syriza.



The pension system has been a worry for decades. Reforms in 1992 and early 2000 did not have the effect the Greece government wanted. If you think you had a healthy system before 2009, you're in denial.



And no one has left Greece. Greece has been cut more slack than they should. Your economy is built on money you don't have. Now you're acting all pissy because that's changing.

 

[AtenRa]

Greece is reforming due to austerity put in place. Reforms for loans. Still not enough, though things were looking up before Syriza.

And thats the problem,
We are forced with austerity measures only, and that creates more deficit and then we are forced for more austerity measures that creates deficit again etc etc.

The pension system has been a worry for decades. Reforms in 1992 and early 2000 did not have the effect the Greece government wanted. If you think you had a healthy system before 2009, you're in denial.

No im not saying the pension system was healthy before, but it deteriorated the last 5 years.
Now with the new measures people are asked to pay more and get even less.
If we continue like that, there will be a time very soon, that people will pay more than what they will get as a pension

 

[AtenRa]

And no one has left Greece. Greece has been cut more slack than they should. Your economy is built on money you don't have. Now you're acting all pissy because that's changing.

The entire European economy is built on money it doesnt have.

http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=teina200
EU28 was at -2.9% in 2014.

Greece have managed to have only -3.5% for 2014, that is lower than Spain (-5.8%) and Portugal (-4.5%) and people saying Greece havent taken measures. :whiste:\

edit: Sweden at -1.9%, i guess its time for austerity measures in Sweden, you have to cut your pensions

 

[MongGrel]

I'd go with Grecnado. That's where bankers who are half man half shark, created by underground Nazi experiments, are sucked up out of the Mediterranean by a cyclone and descend upon Greece eating up all of the money. The only hope of salvation is from the intervention of a list of B-movie actors armed with flame throwers. They save Greece by killing all of the mutant sharks but also destroy Greece by burning all of the money.

edit: don't forget, Sharknado3 is coming to set top box near you soon.

:biggrin:

 

[PingviN]

The entire European economy is built on money it doesnt have.

http://ec.europa.eu/eurostat/tgm/table.do?tab=table&plugin=1&language=en&pcode=teina200
EU28 was at -2.9% in 2014.

Greece have managed to have only -3.5% for 2014, that is lower than Spain (-5.8%) and Portugal (-4.5%) and people saying Greece havent taken measures. :whiste:\

edit: Sweden at -1.9%, i guess its time for austerity measures in Sweden, you have to cut your pensions

Big difference having a deficit due to conjunction drops and having a deficit due to structural issues. And yeah, we'll probably have to cut back on spending soon, don't you worry. Unlike Greece, we have other budget posts than salaries and pensions that can be cut. I doubt you'll see Sweden running debt up to 100+% of GDP again before tightening the belt.



And no, you are not forced to just austerity. You receive billions and billions to keep Greece afloat.

 

[mrmt]

Greece is reforming due to austerity put in place. Reforms for loans. Still not enough, though things were looking up before Syriza.

One of the things the Greek government should answer now is why despite all the *number* of reforms taken we cannot look at the Greek state and see a modern state there? And then comes the second question, is the Greek state trying to reform itself or are they just trying to appease creditors, meaning passing watered down legislation in order to keep much of the status quo ante intact. Given, for example, the corruption reports on the medical sector despite the 25% of unemployment, I think the answer is pretty clear for both questions.