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Old 06-27-2015, 03:30 PM   #21
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In a democracy, people always get the government they deserve.

In a democracy, the majority of voters always get the government they deserve.....the others, not so much.

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Old 06-27-2015, 03:34 PM   #22
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OK, tough luck.

I guess that if you keep finding yourself dissenting with the majority one election after another, you'd better prepare for an exit, i.e. renouncing your citizenship and moving elsewhere.
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Old 06-27-2015, 03:47 PM   #23
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Do we blame politicians for pandering to the populace, or do we blame the people for voting for a pol who promises the impossible things that they want?
I don't disagree with this at all. My post was more specific to the pol himself and my opinion that he's abdicating his responsibility as a leader to save face by calling the referendum. The Greeks elected him to make the tough calls and now that he will not be able to follow through on his hollow, overly optimistic election promises, he refuses to do it.
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Old 06-27-2015, 03:52 PM   #24
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The referendum coming after anticipated default is going to make next week interesting.

Taking a step back, the immediate issue concerns a country with the same gross national product (PPP) as Missouri or Arkansas. If it weren't for the longer term ramifications within the EU, this would be a nonevent for nonGreeks without investments in the country or its debts. Those longer term ramifications, however....
Yes, it's pretty interesting that the total outstanding debt is just south of $400B euro...get a bunch of the big tech firms together and they could pay off the total debt for cash. We're really not talking about much money in the grand scheme...it's just that Greece is structurally broken and all the European banks are cross-wired together yet they're allowed to use default swaps to each other as proof of balance sheet integrity. Insanity. If Greece defaults, th reciprocal insurance is shown to be useless.

I think Greece should go back to the drachma and the ECB should extend immediate liquidity assistance to the banks. Essentially, the same tranche of money that would have been loaned to Greece can be used to bridge the banks.
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Old 06-27-2015, 04:03 PM   #25
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When something like this occurs I want to convince myself that the risk to me is very low. There could be contagion or some unforeseen correlated event that affects the average US investor. But I'm hoping not.

I have a fair amount in international stocks, specifically in the Vanguard FTSE All-World index (VEU or VFWIX). Here is a chart since the beginning of the year when the current Greece leaders took the reigns:



VFWIX is the large cap international index
VEURX is the Europe index
VPACS is the Asia index
VTSMX is the US total stock market index

Seems the Greek issues so far are not holding things back in the general Europe index of which Greece is less then 0.1%. Even less of an issue in the broader based VFWIX index.
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Old 06-27-2015, 04:15 PM   #26
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We had a tour scheduled for Greece but changed it to Italy after the election in December. Didn't want to deal with the uncertainty of it all.Just watching the news makes me cringe.
As Grandma always said, "The chickens will come home to roost; you just wait and see."

My understanding of economics is also limited. But I do understand that, if you continually spend more than you have, your pockets eventually go empty.

We see this daily in our own society, with people living beyond their means. Our own nation has enormous debt....but we can print our own currency.

Greece depends on the policies and practical sense of the EU, yet they are unwilling to face their own empty pockets.

I've always wanted to go there, and have friends who would hop on a plane to go tomorrow. But, right now, I'd be uneasy hanging out in a nation where the general population is unwilling to face the hard facts presented by the EU. Will that lead to anger in the streets?

Not a time for me to visit the Parthenon, I think.....

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Old 06-27-2015, 04:16 PM   #27
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When something like this occurs I want to convince myself that the risk to me is very low. There could be contagion or some unforeseen correlated event that affects the average US investor. But I'm hoping not.
I had the same thought working for a tech company in 1999/2000. The company made lots of money and is sure to be somewhat immune to all of the tech companies with no profitability. I was wrong.

If Greeks leaves the Euro then Europe/Intl will get hit, maybe quite a bit. Uncertainty always generates a ton of volatility. I think all equity markets will be affected to some extent (collateral damage) with recovery occurring quicker in markets less affected by Greece/Europe, such as the U.S./Asia. Overall, I look at it as a buying opportunity.
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Old 06-27-2015, 04:27 PM   #28
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I don't know about all the observation about getting government that you deserve or not, and know next to nothing about Greek taxes, pensions, economy or why their fiscal problems are so deep. But it does seem like these are not new problems, yet supposedly sophisticated big money lenders gave them lots of loans that always looked like they would be difficult if not impossible to pay back. What were these supposed knowledgeable lenders thinking with all that money to put it in such peril?
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Old 06-27-2015, 04:27 PM   #29
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If Greeks leaves the Euro then Europe/Intl will get hit, maybe quite a bit.
Maybe.

But it's also possible that since most investors are well aware that there is a very strong possibility that Greece will exit the Euro this year, that it's already baked into stock prices. Removing the uncertainty might lead to a nice uptick of the general European market.

Maybe.
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Old 06-27-2015, 04:31 PM   #30
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I had the same thought working for a tech company in 1999/2000. The company made lots of money and is sure to be somewhat immune to all of the tech companies with no profitability. I was wrong.
...
Yes, it's hard to see it coming until it happens to you. I was working for a tech company in 2003 and in an R&D job that seemed to be secure and a project that was well funded. It wasn't.

I'm hoping that if Greece affects general indexes, it will happen somewhat slowly and my methodology will work to mitigate losses. We will see.
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Old 06-27-2015, 05:02 PM   #31
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What were these supposed knowledgeable lenders thinking with all that money to put it in such peril?
There are lots of entities to blame. Europe's larger economies wanted easy money for Greece (and others) so these weak economies would continue to buy exports from the larger economies. Greek politicians and business leaders saw no reason to turn down the money, and actively worked to cook the books to keep it coming (this is not in dispute). Once Greece was in really deep and began to teeter economically and politically, European politicians rushed in to extend favorable terms on the debt--they were worried abotu Greece and contagion to other countries (like the old saying: If you owe the bank $100, they call the shots. If you owe the bank $100 million dollars, you call the shots).

Private entities lent more than they ever would have loaned a "loan wolf" Greece because they figured the stronger European economies would keep the money flowing to avoid a worse situation.

Whenever we de-link authority and responsibility/accountability, there will be problems.
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Old 06-27-2015, 05:11 PM   #32
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There's a difference between the EU and the Euro. They won't be kicked out of the EU. There are many countries in the EU that are not part of the Euro. What is being discussed is if they will be kicked out of the Euro.
From what I am reading it is both.... just a matter of when...

It looks like the UK might take a vote on getting out of the EU... and someone was commenting that it would hurt the EU more the Greece leaving...

Edit to add: It is a bit vague... but I remember an article about how the EU has 'rules' that every nation agreed to follow to stay in the EU... Greece has never followed them... they cooked the books to make it look like they were but in reality were not... so if Greece cannot follow the EU rules, they would be kicked out...
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Old 06-27-2015, 06:04 PM   #33
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I too have little understanding about the situation and zero understanding of what the solution is. It's really amazing though how the US markets go up and down almost daily much in part on the optimism or pessimism of what's going on in Greece, at least according to the talking heads, if there's no other economic news. And how many months this has been going on. Poor Greece.
That's the key - there is really no other economic news. The markets churn to the "news de jour" no matter how small. There is rarely any sense of proportion. The newscasters certainly lack it - their job is to make anything sound like life or death for investors.
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Old 06-27-2015, 06:21 PM   #34
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From what I am reading it is both.... just a matter of when...

It looks like the UK might take a vote on getting out of the EU... and someone was commenting that it would hurt the EU more the Greece leaving...

Edit to add: It is a bit vague... but I remember an article about how the EU has 'rules' that every nation agreed to follow to stay in the EU... Greece has never followed them... they cooked the books to make it look like they were but in reality were not... so if Greece cannot follow the EU rules, they would be kicked out...
I think you keep confusing the EU with the Eurozone. Fewer than half of EU countries are in the Eurozone.

To join the Eurozone then financial requirements were set in the late 90's, and I don't know if Greece met the criteria or not but they weren't the only country to fudge the numbers to meet the Eurozone requirements. (Italy was another IIRC)

Criteria for Joining the Euro Zone: Year In Review 2004 | euro zone | Britannica.com


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1. Government deficit must not exceed 3% of GDP. If it does exceed that level, it must have declined “substantially and continuously and have reached a level close to 3%.”
2. Gross government debt must not exceed 60% of GDP. If this is not the case, the ratio must have declined significantly and be moving rapidly toward 60%.
3. The member state must have achieved exchange-rate stability for at least two years according to the rules of the European exchange-rate mechanism, which defines the permitted levels of fluctuation.
4. The nominal long-term interest rates of applicant nations must not have exceeded by more than 2% the average of the interest rates in the three member states with the best records on price stability.
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Old 06-27-2015, 06:55 PM   #35
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Greece never fulfilled all the criteria when it joined the Eurozone in 2001. They made an exception. In retrospect, a bad decision.

Greece's membership in the single currency

I find it interesting that this website will be closed down on June 30th. Hiding the evidence?
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Old 06-27-2015, 08:18 PM   #36
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Greece never fulfilled all the criteria when it joined the Eurozone in 2001. They made an exception. In retrospect, a bad decision.

Greece's membership in the single currency

I find it interesting that this website will be closed down on June 30th. Hiding the evidence?

As Alan mentioned, I think Italy also didn't meet the requirements. Or maybe they didn't meet the ongoing requirements regarding debt/GDP ratio? My memory on this is a bit hazy. I know one of the other concerns is that if Greece leaves the Euro, could they possibly be followed by bigger countries such as Italy? Portugal/Ireland also have tons of debt, even though they are smaller countries. Europe is trying to stay together for good reasons, but I think they got a bit carried away in the 2000s. I doubt the Euro will go away and all we are seeing are growing pains. It happens. In the end, the Euro will be stronger.

In responding to this thread, I was reading a little bit about the Euro and learned that EU countries are required to join the Eurozone once they meet the criteria. The exception is the UK and Denmark, which have opt-out clauses in the Maastricht treaty. But it looks like it's easily avoidable, since one of the requirements is membership of the European Exchange Rate Mechanism (ERM II) for two years, which a country has to voluntarily join. This is how Sweden, for example, can choose to stay out of the Eurozone, even though they should be required to join. I never realized that the Maastricht treaty attempts to require all EU countries to join the Eurozone. It sure makes exiting the Eurozone - for which no provision exists - more interesting.
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Old 06-27-2015, 08:28 PM   #37
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It does affect US markets. If the Euro declines vs. the dollar, it makes US companies less competitive and could cause the markets to sell off.

So you wonder if the EU really cares about keeping Greece in the Euro. They can't say it would be better for the rest of the EU but they may actually believe it.

Greece's complaint was that the troika imposed austerity on them back in 2010, stringing things along. Greece is now in depression, high unemployment and so on.

Germany seems to be high on moral hazard and schadenfreude at the moment.

Some of the terms they couldn't agree to include raising VAT on hotels and restaurants to 23%. Tourism is the biggest industry in Greece so make it more expensive and more difficult to generate revenues is a good idea?

Syriza proposed raising taxes on the high earners and businesses but the creditors shut that idea down. Seems like they wanted to impose more of the pain on the people without the money.
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Old 06-27-2015, 08:57 PM   #38
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Greece never fulfilled all the criteria when it joined the Eurozone in 2001. They made an exception. In retrospect, a bad decision.

Greece's membership in the single currency
And even the figures provided by Greece in 2001 were very fishy. The Greek government later admitted they used an incorrect set of accounting rules. And lots of finger pointing about other nations that also cheated. It's a Gordian's Knot of Greek and European political intrigue. Summary here.
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Old 06-27-2015, 09:54 PM   #39
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I feel sorry for the tourists with confirmed flights going into Greece upcoming weeks. I saw one gentleman on the internet asking if he should take Euros with him on Monday.


Absolutely. It may take a while for this mess to come to a head.
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Old 06-27-2015, 10:33 PM   #40
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Having individual national currencies allows markets to decide if a nation's monetary and fiscal policies are good or bad (relative to the policies in other countries). It happens quickly, without committee meetings and favor-trading, and the results aren't subject to whining and negotiating. And it breeds less inter-nation animosity than what we are seeing here.

In some cases, the euro is a solution much worse than the problem.
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