Greece

[NW-Bound]

It is interesting nevertheless to think of "debt per square mile".

Darn! How are we going to generate $6M out of a square mile of scorched earth to pay the debt, with no water to grow anything because of the drought?

Oh boy! I should not be badmouthing the Greeks anymore.

 

[Fermion]

USA has a pretty diverse geology. Even what once was looked on as worthless land in North Dakota is now valuable (well, it was when oil was $100 a barrel heh heh).

Are you saying every square inch of Greece is fertile, full of resources and water?


Measuring debt per square mile actually seems more reasonable than debt per person. People are expendable and expandable, it is very hard to create more land.


An extreme: Everyone move out of Texas and deed it to me. I will take on $10,000,000 worth of debt and still be happy as a clam. My country of Texas, $10,000,000 debt per person, but my land generates $10,000,000,000 in oil and gas.

 

[ulrichw]

I have yet to see a plan for what would be done if Greece leaves the EU (votes "no" on July 5). Without a plan why would anyone vote "no"?

Where is the plan for Greek survival if not backstopped by the EU? Won't pensioners starve whereas now they are getting some Euros?

There is this from Wikipedia with no mention of the costs or who pays:
Plan Z during 2012

https://en.wikipedia.org/wiki/Greek_withdrawal_from_the_eurozone

Wow - thanks for this excellent citation (in particular the Financial Times article it references).

The article is the second in a three-part series (all worth reading if you're interested in the current Greek crisis), which can be found by googling the following terms:
part 1: "how the euro was saved"
part 2: "Inside Europe's Plan Z"
part 3: "if the euro falls europe falls"

The startling (but perhaps retrospectively unsurprising) fact is that we're reliving many of the things that already happened then (including a Greek Prime Minister calling a referendum (then quashed) on a Euro plan).

In any case, the articles don't directly answer your question, but I believe the paper by Anil Kashyap (linked in what's currently post #206 of this thread by ronin) at least briefly talks about a possible path.

Basically the greeks lose access to debt markets, but at the same time also get to write off the debt (the former is the cost of doing the latter).

This means (per the paper) that Greece would be forced to live within its means. Interestingly enough (also per the paper) this is something that it has already done in 2014 - the only thing keeping them in a deficit was the interest on the debt.

Therefore, the immediate effect of removing all debt could actually be positive for Greece, despite a future inability to incur more sovereign debt (at least until the markets forgive the default).

There is another positive factor - once out of the Eurozone, Greece gets to print their own money. This means they have access to a whole range of monetary policies which are currently out of their reach.

Their currency is likely to be weak compared to other currencies which will in turn boost Greek exports and boost Greek tourism (due to relatively low prices in Greece vs. Euro-denominated destinations). These boosts may help fuel a growth spiral in the Greek economy.

The upshot is, it's not a given that Greece is worse off outside the Euro. The pensioners certainly won't starve.

I still feel that staying in the Euro is the better option for Greece, but there are clearly trade-offs to be made.

 

[brewer12345]

it would be an easier decision.

"Both"

 

[Lsbcal]

...
In any case, the articles don't directly answer your question, but I believe the paper by Anil Kashyap (linked in what's currently post #206 of this thread by ronin) at least briefly talks about a possible path.

Basically the greeks lose access to debt markets, but at the same time also get to write off the debt (the former is the cost of doing the latter).
...

Thanks, I have now read the article mentioned in #206 after you pointed it out. It's an interesting read.

My feeling is that the vote will be "yes" on July 5. So there is no need to ponder the "no" question.

It is then a question as to what government will remain to continue negotiations. Since Greece is a parliamentary government, it's not like Tspiras will stay in power. I'm sure his party has a "yes" strategy. But he has alienated the Germans and others in a most alarming way. It's amazing to me that those people and especially Tspiras are still smiling in public.

And so the drama will go on.

 

[NW-Bound]

Yes, no matter what happens, life will go on. The Greeks still have the ocean from which to catch fish, their goats to make feta cheese and to spit-roast, their olive trees, their grapevines. They will still drink ouzo and dance the Sirtaki.

 

[brewer12345]

If they get booted from the Euro I expect to buy some very high quality wines at low, low prices.

 

[NW-Bound]

And I expect to travel there more cheaply. It may be crowded, however.

 

[samclem]

And I expect to travel there more cheaply. It may be crowded, however.

Not if you save up your whole SS for a month and just buy one of their little islands. They are cute!

 

[brewer12345]

And I expect to travel there more cheaply. It may be crowded, however.

If Greece treads the path of Venezuela and Argentina, I would have absolutely no interest in travelling there for quite a while.

 

[NW-Bound]

I hope the Greeks will do better.

Here's a Greek flash mob dancing the Sirtaki in 2011. Thought it was in Greece, but saw that it was in Ottawa. The native Greeks are too busy standing in line at the automatic tellers to dance.

 

[redduck]

Not if you save up your whole SS for a month and just buy one of their little islands. They are cute!

You are close to a good idea.
What do we know about Greece?: It has good weather, it's already a popular destination for tourists and it's in severe financial stress.

So....

Why not simply give all of Greece to Disney? Forgive Greece's debts (since they won't be paid off anyway) and let Disney take over. Disney is not in financial stress. As a matter of fact, Value Line rates it highest for safety and for financial strength.

Disney knows how to make money. Let them own and run Greece. They know how to run resort areas. They are already global. Disney knows logistics, community planning, finance, travel, etc. They probably have their own employment office. I'm sure they would figure out a tax system that worked. Greek pensioners could pick up part-time jobs working at various theme parks around the country. The teacher cited in an earlier post could live his dream and come home and find work. Bet Germany and France will jump on this idea once they hear about it.

 

[Meadbh]

I hope the Greeks will do better.

Here's a Greek flash mob dancing the Sirtaki in 2011. Thought it was in Greece, but saw that it was in Ottawa. The native Greeks are too busy standing in line at the automatic tellers to dance.

Yes, that's the Byward Market in Ottawa, about 2 blocks from the U.S. [-]fortress[/-] embassy. At one point you can see the Canadian parliament buildings in the background.

I don't think too many Greeks are dancing tonight.

 

[Free_at_49]

Somebody calculated that a 3-Euro donation from everybody in the European Union would pay off the Greek debt. Crowd-funding. The website keeps crashing from the overwhelming response.

https://www.indiegogo.com/projects/greek-bailout-fund#/story

 

[karluk]

Yep, everything about this crisis suggests that it's being staged for the amusement of observers like me. The latest headline says that Tsipras, only a day after publicly announcing that he would resign rather than agree to the creditors' terms, has now capitulated and is agreeing to virtually all of the creditors' demands. I tell you, you can't make this stuff up because nobody would believe it. I wonder if Tsipras really plans to resign. Gee, I hope not. It's not often that a world leader emerges who has such an instinctively perfect sense of comedic timing.

 

[2017ish]

I don't think this has been referenced in the thread, on the subject of cutting pensions, and the lack of support for Greece from the smaller economies in the EU:

When Greece’s finance minister, Yanis Varoufakis, in an early round of negotiations in Brussels, complained that Greek pensions could not be cut any further, he was reminded bluntly by his colleague from Lithuania that pensioners there have survived on far less. Lithuania, according to the most recent figures issued by Eurostat, the European statistics agency, spends 472 euros, about $598, per capita on pensions, less than a third of the 1,625 euros spent by Greece. Bulgaria spends just 257 euros. This data refers to 2012 and Greek pensions have since been cut, but they still remain higher than those in Bulgaria, Lithuania, Latvia, Croatia and nearly all other states in eastern, central and southeastern Europe.

http://www.nytimes.com/2015/06/30/w...ct-little-sympathy-from-poorer-neighbors.html

 

[JoeWras]

I don't think this has been referenced in the thread, on the subject of cutting pensions, and the lack of support for Greece from the smaller economies in the EU:

http://www.nytimes.com/2015/06/30/w...ct-little-sympathy-from-poorer-neighbors.html

The Greeks are not particularly fond of some of their near neighbors to the North. Greek maps list their middle north neighbor as "FYROM". They will not call it "Macedonia" because they stole their name. The point being that Greeks won't give a flip about the Bulgarian situation.

That said, this is complicated. If you lower the pensions for the retirees, they may have to do like the Bulgarians and eat in more. Less eating at the Tavernas. Tavernas will fail. Working people go unemployed. Etc.

This whole unfunded pension situation is crazy stuff. The world over needs to pay attention. It is too easy for current politicians to kick the can to the next generation. This has to stop. (Illinois? Hello?)

 

[Ed_The_Gypsy]

I am reminded of Argentina: "It's your fault! You loaned us the money!"

Sent from my SM-G900V using Early Retirement Forum mobile app

 

[tulak]

I don't think this has been referenced in the thread, on the subject of cutting pensions, and the lack of support for Greece from the smaller economies in the EU:



http://www.nytimes.com/2015/06/30/w...ct-little-sympathy-from-poorer-neighbors.html

Cost of living is very different in these countries, which makes comparing fixed Euro amounts between countries next to impossible.

This would be the same as somebody in the Midwest saying that 100k in NYC is too much money, but in the U.S. it is easier to relocate. I doubt Bulgaria would be happy if all these Greeks suddenly showed up to live there.

I can understand the poorer members frustration with Greece, especially since they have to help out with their bailout. It would really suck if you had to bailout your spendthrift richer sibling.

 

[tulak]

Not sure how accurate the data is on this website, but it allows you to compare cost of living between two different cities. Here's a comparison between Athens, Greece and Sofia, Bulgaria.

http://www.numbeo.com/cost-of-livin...aria&country2=Greece&city1=Sofia&city2=Athens

It looks like Athens is about 50% more expensive than Sofia.

Based on this, it looks like pensions are more generous in Greece than in Sofia, but I suspect smaller cities in Bulgaria have cheaper cost of living than equivalent cities in Greece.

 

[Running_Man]

While the Greek pensions may be more generous than other countries, this was known for years, to cut pensions once a person is unable to work is wrong. That is why US and states should insure they can meet their pension obligations when they promise them. The creditors who lent money when they knew there were these obligations in my mind are the ones who should bear the brunt of the bankruptcy they enabled and the cutting of benefits for people who cannot get a job should not be cut in Greece or anywhere, bondholders should have to bear the price, I realize that will never occur.

 

[NW-Bound]

... bondholders should have to bear the price...

This may be what will happen. The 370B euro existing debt gets cancelled. That helps, but what's the source of new money to pay pensions? I think they are still short.

 

[Free_at_49]

This may be what will happen. The 370B euro existing debt gets cancelled. That helps, but what's the source of new money to pay pensions? I think they are still short.

EU rules prohibit the use of these loans to finance governments. The loans are only being used to re-finance the debt.

 

[ulrichw]

This may be what will happen. The 370B euro existing debt gets cancelled. That helps, but what's the source of new money to pay pensions? I think they are still short.

The following quote is excerpted from an excellent summary of the Greek situation in lay language by Prof. Anil Kashyap (originally referenced by ronin in Post 206 of this thread):
http://faculty.chicagobooth.edu/anil.kashyap/research/papers/A-Primer-on-the-Greek-Crisis_june29.pdf

By late 2014, Greece was finally spending less than it was collecting, although the interest payments on debt meant there was still an overall deficit. So for the first time since Greece adopted the euro it had budget position that
was solid.

 

[Fermion]

While the Greek pensions may be more generous than other countries, this was known for years, to cut pensions once a person is unable to work is wrong. That is why US and states should insure they can meet their pension obligations when they promise them. The creditors who lent money when they knew there were these obligations in my mind are the ones who should bear the brunt of the bankruptcy they enabled and the cutting of benefits for people who cannot get a job should not be cut in Greece or anywhere, bondholders should have to bear the price, I realize that will never occur.

So bonds are only held by people who have jobs? Interesting.

I always thought some people had bonds in their retirement account. Some people only have retirement accounts and don't have access to a pension.