Greece

[Texas Proud]

Who is acting unreasonably here? Could it be the EU leaders who so far have refused even to discuss debt restructuring, which IMF has deemed necessary to Greek's survival? Not so clear cut that Greek leaders are the bad guys. Looking backwards, Greece probably didn't really qualify for Eurozone inclusion, given the significant cultural/fiscal differences. But, now here we are. Who is going to act like adults? So far, nobody, including the EU leaders.

I think you have not been reading much on the proposals... there have been big time debt restructuring offers.... much later maturities, delayed interest payments, even lower interest rates etc. etc....

What has not been proposed is debt relief... that seems to be what Greece is looking to get and if they do not they will not agree.... I think they had a good offer and screwed up by not taking it.... kinda like when the Palestinians did not take the offer from Israel where they could have had most of what they wanted, but now have very little many year later...

 

[Texas Proud]

But that is exactly what happens in the US - some states get more in federal aid per capita, others give more. (Goggle "which states are givers"). Here, because we share a somewhat common culture, history, and sovereignty, such disproportionality does not yield political difficulty.

But the EU is different - a common currency shared among different sovereigns who, as often as not, were enemies in the past. If Greece bails out, it will highlight a fundamental political weakness of the Eurozone that may cause irremedial damage to this grand experiment of a common currency zone.

In the long run, Germany has more to lose than Greece, if the Euro is destabilized.

If I were Illinois I would not be hoping to get a bail out from the fed gvmt for all the spending that has been going on for years.... so in a way it is like the EU and Greece.... and since Illinois cannot file for BK.... they are not going to get debt forgiveness either...

 

[Ed_The_Gypsy]

We have only heard from a few folks in this thread who have identified themselves as Europeans. Having lived amongst [archaic Scottish word] them, it interests me what their opinions are, bein' as how they are committed as opposed to involved. (Reference joke about pigs and chickens w/ respect to bacon and eggs.)

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

 

[explanade]

Reason Greece didn't default in 2009, when their problems were uncovered, is that it would have hurt a lot of German and French banks.

So essentially, the EU "rescued" Greece, which basically prevented their banks from being hit hard.

Germany doesn't want to go back to Deutsch Mark. Their economic growth comes from exports. They run a trade surplus and if their products become more expensive, that will hurt their growth.

 

[ERD50]

Reason Greece didn't default in 2009, when their problems were uncovered, is that it would have hurt a lot of German and French banks.

So essentially, the EU "rescued" Greece, which basically prevented their banks from being hit hard.

Germany doesn't want to go back to Deutsch Mark. Their economic growth comes from exports. They run a trade surplus and if their products become more expensive, that will hurt their growth.

Interesting rationalizations. Perhaps a screen-name change to explanadanopoulos is in order?


-ERD50

 

[Sunset]

If I were Illinois I would not be hoping to get a bail out from the fed gvmt for all the spending that has been going on for years.... so in a way it is like the EU and Greece.... and since Illinois cannot file for BK.... they are not going to get debt forgiveness either...

IL is going to possibly feel the pain as Greece and Puerto Rico are feeling of workers leaving for better opportunities and in the case of IL less taxes.

 

[TimSF]

It is now clear "NO" is going to win, and likely there will be plenty of pain to go around. Because EU would not consider even partial debt relief (as the IMF urged was necessary), it now faces the prospect of total debt default of $1 trillion. A senior German banking official is quoted today a saying this would "blow a hole" in Germany's budget.

Amazing to watch mature politicians, on all sides, acting like adolescents and precipitating a potential political crisis that was not necessary.

 

[TimSF]

I would bet Germany gets over it more quickly than Greece.

You're probably quite right about that, but Germany's export-oriented economy has greatly benefited from the Eurozone (more than any other EU country perhaps?). Germany may have just lost the Greek market.

 

[brewer12345]

Interesting rationalizations. Perhaps a screen-name change to explanadanopoulos is in order?


-ERD50

I believe he is correct, actually. But that was 2010, this is now. The EU has had 5 years to force the banks to treat Greek debt like the junky paper it really is instead of telling them Greek and German bonds are the same. Ultimately it is much more in Europe's interest to boot Greece than it was 5 years ago.

 

[Running_Man]

I think you have not been reading much on the proposals... there have been big time debt restructuring offers.... much later maturities, delayed interest payments, even lower interest rates etc. etc....

What has not been proposed is debt relief... that seems to be what Greece is looking to get and if they do not they will not agree.... I think they had a good offer and screwed up by not taking it.... kinda like when the Palestinians did not take the offer from Israel where they could have had most of what they wanted, but now have very little many year later...

The IMF on the deal this past Thursday:

To the contrary, the I.M.F’s analysis assumes that Greece accepts and meets the terms of the latest offer from its creditors, which the Prime Minister, Alexis Tsipras, rejected last weekend. This deal would involve the Greek government running a primary budget surplus of one per cent of G.D.P. this year, two per cent in 2016, three per cent in 2017, and 3.5 per cent thereafter. Even if this were to happen, and the Greek economy were to expand at a rate of 1.5 per cent annually, a fifty-per-cent improvement on its historical trend, Greece’s debts are so large that “further concessions are necessary for debt sustainability,” the report says.

Greece is bankrupt and no financial arrangement will change the fact the countries holding loans are just hoping Greece is bailed out and the can be pushed down far enough that it won't effect the reputations of the present financial ministers. At 5 percent interest rate interest would be nearly 10 percent of GDP, Greece is not the only economy in danger of this issue.

If the vote goes no as is appearing likely right now it will be interesting to see the effect on the markets. With 30% of the vote in it is going 60/40 no so those that loan at low interest rates to countries that cannot possibly pay must begin to look at other countries that are next in this market, it is the manipulated interest rates and excess debt that is causing the problem, not the failure to assure a deal at even lower rates.

 

[LOL!]

The Greeks assume that they will get a better deal in the negotiations. If I was on the other side, I would simply say, "That's nice that you had a referendum, but it will not blackmail nor humiliate me into changing my negotating stance."

 

[2017ish]

It is now clear "NO" is going to win, and likely there will be plenty of pain to go around. ...

Wow. WSJ (15 minutes ago) carries Official Greek projection, albeit very preliminary, of 61% "No." That is striking if it holds.

E.T.A. Link that should work: http://on.wsj.com/1evtvVK

 

[Fermion]

So what happens if Greece goes back to the drachma? Would your funds in a Greek bank be automagically converted to some number of drachma? What about Euros in current use inside the country?

As much as the haters hate gold, I imagine I would rather have a few kilograms of gold in my Greek safety deposit box than a few kilograms of whatever new drachma comes into existence.

 

[brewer12345]

So what happens if Greece goes back to the drachma? Would your funds in a Greek bank be automagically converted to some number of drachma? What about Euros in current use inside the country?

As much as the haters hate gold, I imagine I would rather have a few kilograms of gold in my Greek safety deposit box than a few kilograms of whatever new drachma comes into existence.

Scratch that. I'd rather have a few kilograms of gold hidden in my home. Greek banks have been closed for a week.

 

[Fermion]

Scratch that. I'd rather have a few kilograms of gold hidden in my home. Greek banks have been closed for a week.

I would probably be paranoid with that amount in my house. Then again I would be paranoid with that amount in a Greek bank as well.

 

[Lsbcal]

I was wrong about the Greek vote outcome. I hope the markets will not go down badly starting tomorrow.

Now I wonder how Tspiras will manage to give his European creditors the political coverage to reach a compromise. So far he has tried to make them look evil. Nobody wants that image and no politician wants to loose so much face. He has won with his people but failed with the people who have to give Greece money.

Here is how the BBC shows the debt (and it is not a trillion but is big):

 

[samclem]

Fresh off the referendum, Tsipras has even less domestic political "cover" to ask the Greek people for sacrifice (something he was already reluctant to do). He's hoping to use the result to extract concessions from Greek creditors, but they'd be foolish to do it with Span and Italy--with much bigger debts--watching on. But, they have done foolish things before.

Tsipras, or his successor, will be in a better position to ask the electorate to make concessions after more people have suffered for a longer period of time. Another few weeks of currency controls, business shut downs, etc will probably fill the bill. Very sad.

 

[karen1972]

Its hard to see how Greece fixes any of its problems when people are refusing to pay taxes and Greece doesn't seem in a hurry to collect them...very odd way of running government. Its gotten out of hand where the "why should I pay when others don't" becomes the norm not the outlier. Add to that the pension..and you have an unfixable problem without new leadership and someone stepping in to play parent.. the we are all in this together, its going to be tough but we will get through it by doing A, B, C.




I had thought about buying Greece bonds a few years ago but even at the ridiculous interest returns, I couldn't bring myself to as I never trusted they could pay it back as they have a horrid track record. Honestly I don't know who is going to lend them money..I think they are foolish unless you were paid first. Maybe is about raffling off some really nice properties in the Greek isles that are behind on their tax payments

 

[Lsbcal]

...
I had thought about buying Greece bonds a few years ago but even at the ridiculous interest returns, I couldn't bring myself to as I never trusted they could pay it back as they have a horrid track record...

Good you didn't bite. Apparently several hedge funds are going to loose a lot of money.

Here is a link to Greek bond rates which I think were last traded on Friday:
Greece Govt Bond 10 Year Acting as Benchmark Analysis - GGGB10YR - Bloomberg Markets

 

[Totoro]

Good you didn't bite. Apparently several hedge funds are going to loose a lot of money.

As far as I know no retail investor ever received a haircut from Greek bonds.

Only institutionals were "volunteered" to haircut. Do you have information it will be different this time?

I looked into buying Greek bonds a while ago too, couldn't even buy them.

 

[Lsbcal]

I only buy US bond funds. Safety and capital preservation plus maybe a small real return over time.

I've only looked at the Greek bond prices as a way to discern market sentiment.

 

[mpeirce]

As best as I can see there are two groups of folks mainly affected: the Greek people and speculators.

The Greeks are voting and will have to live with what they choose.

Anyone holding Greek debt at this point is basically a speculator. Either that or really stupid.

 

[LOL!]

The Greeks do not like the austerity measures imposed from the outside. Well, guess what? They voted themselves even more austerity measures from the inside.

But there are some lessons here. For instance, what would you do if you could not get money out of your bank account for a few weeks? That did happen to me, but I could just use a credit card for awhile. I'm not sure how long I could go without a credit card and without cash.

 

[NYEXPAT]

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).

 

[Nemo2]

So what happens if Greece goes back to the drachma?

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.)