Greece

[Fermion]

Does the Greek government even have the wherewithal to print & distribute new Drachmas? (Presuming that they've long since destroyed all the previously obsolete ones.)

There was some mention that they do have a printing press in Athens which is used to print Euros.

I predict what will happen is the Greek government will establish a one for one exchange rate of New Drachmas to Euros. The Euro will still be used everywhere else in Europe and will be the real coin Greeks want. The black market exchange rate will be a lot lower than 1 Euro for one New Drachma...probably more like 10 Drachmas get you a Euro on the black market.

The government will pay pensions in Drachmas, so essentially everyone has voted themselves a 90% cut in pensions.

 

[Totoro]

62% "No", Glad to see the Greek people stick it to the Troika! It is always better to die swiftly than to suffer the death of a thousand cuts ( a Greek saying).

I learned about this today due to this comment:
https://en.wikipedia.org/wiki/Lingchi

Creativity of men knows few bounds.

 

[pb4uski]

...The government will pay pensions in Drachmas, so essentially everyone has voted themselves a 90% cut in pensions.

Interesting thought. Probably worse than a good workout deal with the European financiers would have resulted in.

I suspect they have cut off their nose to spite their face.

 

[Lsbcal]

...
The government will pay pensions in Drachmas, so essentially everyone has voted themselves a 90% cut in pensions.

This is one possible outcome.

I read that the pensioners voted strongly "yes" and the young voted "no". Many of the pensioners are apparently supporting some of their young.

 

[Nemo2]

I read that the pensioners voted strongly "yes" and the young voted "no".

I fear the young, in their nescience, (as they so often do), have inflicted an unpleasant life lesson upon themselves.....whether or not they'll be capable of comprehending the outcome of their actions, (as opposed to blaming 'the other', and/or developing conspiracy theories), remains to be seen.

 

[Texas Proud]

It appears that the Greeks have played their gambit... I do not think it will work... IMO they fail to see that there are others that have debt and the creditors do not want to give them any idea...

If this were a stand alone problem, this might have worked... but it isn't and I do not think it will....

I also do not see how the Eurozone is going to be able to get it by their own citizens... sure, Greece showed that there is 'democracy', but they fail to think that other countries get to also vote... and since Greece is the ones who need money...... well.....

 

[Alan]

Democracy comes from the Greek word dēmokratía (rule of the people) and the people have spoken.

Someone earlier asked for comments from some of the Europeans on the board. As an EU citizen I have been amazed at how long the Eurozone countries have let this drag on and think that they should not have let Greece join the EMU in the first place and should cut them loose now.

I remember listening to Sandi Toksvig on the BBC, 2 or 3 years back. She said she had been at a dinner where the quest speaker was an ex-finance minister from Greece and she said that she could summarize his speech by him saying that when Greece joined the Eurozone they were given a load of money which they spent on a big party and now have a huge hangover. And if they got a load more money they would do exactly the same again.

 

[JoeWras]

Loved my trip to Greece. Loved the people. But man, this is frustrating.

 

[M Paquette]

Hilarity ensues...

Here we go again.

View attachment 21980

So here's a country with total debt of about 1% of the EU's annual output, an economy about the size of Alabama, already in a deep depression. Why is this a surprise to anybody?

And of course, the markets are shocked, Shocked!, by the current events; at least if you believe the talking heads that want to tell you more, after this brief message. Stay tuned. Folks will flush many times the total Greek debt out of the market at the open tomorrow.

This is what cash reserves are for. Buying hand over fist once the panic-prone have done their thing and the market is washed out.

Remember the Rules, folks:

• Once you have their money, you never give it back.
• Never spend more for an acquisition than you have to.
• Even in the worst of times, someone turns a profit.

 

[Meadbh]

I am an EU citizen, though I don't live, vote or pay taxes there, and I have never visited Greece. My home country (Ireland) recently lent Greece 350 million Euro, which will now have to be written off. That's contributing to austerity in Ireland, too, but at least the Irish economy is recovering.

Everybody knew that the data were massaged to allow Greece to join the Eurozone in the first place. Over the years, Greece overspent wildly while making no serious effort to address its growing deficits or to get people to pay income taxes. There is lots of blame to go around.

It has been pointed out (notably by Margaret Thatcher decades ago) that the common currency was doomed to fail in the absence of central government, which is a nonstarter in Europe. Small economies lose the option of currency devaluation, which can help to get them out of a jam. Better to avoid such eventualities. The Greeks, whose current misfortune is to a large extent their own making, have voted "against austerity". Fine. Let's cut the cord, Greece can return to the drachma, and let things settle where they will. The EU and IMF can write off some of the debt, but let's not spend good money after bad.

 

[Chuckanut]

Bitcoin as the new Greek currency?

 

[Another Reader]

Licking my chops and gunning for bear....


Between Greece and the Chinese, there should finally be a good sale on equities.

 

[Fermion]

Licking my chops and gunning for bear....


Between Greece and the Chinese, there should finally be a good sale on equities.

Mmmmm, unsure. Seems everybody expects a market drop now, which is usually when it goes up.

 

[Nemo2]

Mmmmm, unsure. Seems everybody expects a market drop now, which is usually when it goes up.

Australia has been open for an hour....down around 1.7%.

 

[Lsbcal]

Mmmmm, unsure. Seems everybody expects a market drop now, which is usually when it goes up.

Well I expected a "yes" vote from Greece.

Now I expect a market drop followed very shortly by a counter rally before the week is out. I'm not betting a thing on that idea.

 

[FIREd]

It has been pointed out (notably by Margaret Thatcher decades ago) that the common currency was doomed to fail in the absence of central government, which is a nonstarter in Europe. Small economies lose the option of currency devaluation, which can help to get them out of a jam. Better to avoid such eventualities. The Greeks, whose current misfortune is to a large extent their own making, have voted "against austerity". Fine. Let's cut the cord, Greece can return to the drachma, and let things settle where they will. The EU and IMF can write off some of the debt, but let's not spend good money after bad.

+1.

The Greeks have spoken. This is our turn to answer. And I hope that EU leaders will defend their taxpayers' interest with the same vigor and spunk as Tsipras defended the interest of his people. If the credibility of the Euro is to be preserved, then I think that there is no alternative to "Grexit". Even then, this vote shows that the fundamental underpinnings of the Euro were flawed from the start. When their national interest is on the line, people will stop playing by the rules they originally agreed upon. And without firm rules, there cannot be a common currency.

 

[Running_Man]

+1.

The Greeks have spoken. This is our turn to answer. And I hope that EU leaders will defend their taxpayers' interest with the same vigor and spunk as Tsipras defended the interest of his people. If the credibility of the Euro is to be preserved, then I think that there is no alternative to "Grexit". Even then, this vote shows that the fundamental underpinnings of the Euro were flawed from the start. When their national interest is on the line, people will stop playing by the rules they originally agreed upon. And without firm rules, there cannot be a common currency.

The rules were broken in 2010 when Greece was lent money when they were not eligible in order to save the German banking system. The IMF conceded that it bent its own rules to make Greece's burgeoning debt seem sustainable and that, in retrospect, the country failed on three of its four criteria to qualify for aid. They were bankrupt then, they are bankrupt now and they would still be bankrupt in the future if they accepted the EU proposal, which again is just making rules up on the fly, to protect not the Greek economy but primarily the German economy, as the German economy is viewed as key to holding Europe as a world power.

This is 2 percent of German GDP, 400 million a month in trade. The amount of trade Germany has with Greece is the same percentage as the United States holds with Germany. Bankruptcy merely bring quickly what the IMF would have preferred to drain out over the next 40 years.

So people are ready to jump in with both their cash reserves on a projected 1.5% drop? I realize world finance for the last 6 years has rested on the propping up of stock markets around the world and that declines are no longer allowed by most major countries (see China stating the government will start buying stocks to stop the most recent fall) but really whatever happens this next week is really nothing financially, it is whether or not a third block topples over in the debt domino game and that is going to be months in the making.

A common theme that is occurring is leading governments are losing control of debt manipulation as the levels in some cases are just too high to continue the manipulation.

 

[samclem]

There should be some DARN good USD prices on Aegean cruises coming. "Just stay together in a group and with the armed security guards when we get to shore. "

 

[explanade]

Read this on a travel forum:

My god-daughter is in Mykonos right now and she says most of the ATMs have run out of money and are closed and the ones that are open have extremely long lineups.
All businesses will only let you pay in cash, no credit cards and they are finding prices super high. She said the people are lovely, but desperate and scared.

Vueling lost their luggage coming from Barcelona so they were without it for five days. Very small tube of sunscreen: 28 euro, dress you'd pay next to nothing for at home (Australia) 180 euro.

They understand why and are sympathetic but they are uni students on a budget so are finding it a bit tricky.

Well they are living through history in the making and it is a testament to how my friend's raised their daughter that she is handling it fine, but her two friends, not so much.

 

[Texas Proud]

+1.

The Greeks have spoken. This is our turn to answer. And I hope that EU leaders will defend their taxpayers' interest with the same vigor and spunk as Tsipras defended the interest of his people. If the credibility of the Euro is to be preserved, then I think that there is no alternative to "Grexit". Even then, this vote shows that the fundamental underpinnings of the Euro were flawed from the start. When their national interest is on the line, people will stop playing by the rules they originally agreed upon. And without firm rules, there cannot be a common currency.

I will throw out a counter argument...

All it shows is that they did not vet Greece properly before they allowed them into the Euro zone.... everybody has agreed that they cooked the books (even the Greeks).... so, without cooked books they would not be in right now....


SO, booting them out of the euro is only fixing the mistake they made in the first place.... not that the euro is flawed.....

 

[NYEXPAT]

One of my Scottish friends posted this recently:

The European members on the IMF board suppressed the publication of an IMF analysis that the Greek debt was unsustainable, and therefore vindicating Mr. Tsipras that a debt restructure was an essential part of any plan going forward. The report was eventually published because IMF staff leaked it in outrage at the suppression.

What are these mealy mouthed Franco-Prussian technocrats up to?

The cradle of democracy has stood up to the unelected commissars in Brussels and taught them a humbling lesson.

Many Greek public servants are at 60% wages, and youth unemployment is at 50%. Hopefully now all parties will act to stop the continued human suffering, pain and uncertainty.

I thought the EU was there to help. Not to crush and dominate!

 

[razztazz]

I will throw out a counter argument...

All it shows is that they did not vet Greece properly before they allowed them into the Euro zone.... everybody has agreed that they cooked the books (even the Greeks).... so, without cooked books they would not be in right now....

When I was in Europe in the early 90's (mostly Germany) the buzz was all about Greece, Portugal, and to a lesser extent, Spain. Most people didn't want them in the club because they were considered economic weaklings and would eventually ruin things for everybody else. This is not a surprise.

 

[samclem]

One of my Scottish friends posted this recently:

The European members on the IMF board suppressed the publication of an IMF analysis that the Greek debt was unsustainable, and therefore vindicating Mr. Tsipras that a debt restructure was an essential part of any plan going forward.

That's the part everyone keeps quoting. The IMF also said that real reforms of the Greek public sector and spending would need to occur, the types of reforms Tsipras has repeatedly refused to make. Many of these reforms are not extraordinary--they are things like cutting staffs in offices where the "workers" don't come to work anyway.

I thought the EU was there to help. Not to crush and dominate!

"Help, I'm being crushed by the piles of money I asked for."

The Greeks may soon get a chance to face the world on their own two feet without all this "domination".

Referenda are great. Maybe we'll have referenda in France, Ireland, Germany, Spain, etc. "Citizens, Are you in favor of sending one more euro from your taxes to Greece?". Then the other member states can say "Well, sorry. Our people have spoken. Democracy you know"

 

[samclem]

SO, booting them out of the euro is only fixing the mistake they made in the first place.... not that the euro is flawed.....

No, the euro remains just as flawed as ever. Greece is just one case, but even if it had legitimately gotten into the eurozone, their deep problems would have still led to this. Each country has its own economic and fiscal policies, and as a result they need independent currencies so they have maximum flexibility to devalue their currencies when needed and so that the market can provide pricing signals. The "problem" solved by a single currency -- floating exchange rates-- was actually a tremendous positive feature that helps prevent the very thing we are seeing today in Greece, and will see again.
The only way the euro will work is if countries give up more control and sovereignty to Brussels--they become more like US states and less like nations. If we look at how the EU leadership is elected, we'll see that this would be a huge move away from local political control. No citizen in Europe votes for the President of the European Council, most probably couldn't name him (Donald Tusk).

 

[Texas Proud]

No, the euro remains just as flawed as ever. Greece is just one case, but even if it had legitimately gotten into the eurozone, their deep problems would have still led to this. Each country has its own economic and fiscal policies, and as a result they need independent currencies so they have maximum flexibility to devalue their currencies when needed and so that the market can provide pricing signals. The "problem" solved by a single currency -- floating exchange rates-- was actually a tremendous positive feature that helps prevent the very thing we are seeing today in Greece, and will see again.
The only way the euro will work is if countries give up more control and sovereignty to Brussels--they become more like US states and less like nations. If we look at how the EU leadership is elected, we'll see that this would be a huge move away from local political control. No citizen in Europe votes for the President of the European Council, most probably couldn't name him (Donald Tusk).

Actually they would not have the same problem... first, there would be no way to get to as much debt as they have... it would be impossible...

At the heart of the accord are the fiscal requirements that were laid down in the treaty that led to the creation of the euro as a common currency 20 years ago; it called for the euro zone countries to limit budget deficits to no more than 3 percent of gross domestic product and to restrain overall debt so that it remains below 60 percent of annual economic output.

​

Greece was running 10% to 12% deficits and has what... a 180% overall debt ratio... if they had followed the rules, they would have made the necessary changes many years ago....



I do agree that the euro is flawed... but it is that there really is no way to stop a country from cheating on the rules...


And I still disagree that the US would be bailing out a state like people think should happen to Greece... as I said before, Illinois is in need of a bailout... I do not see it happening.... I remember way back when NYC was bailed out, but they were given loans and they paid it back...