Greece

[Fred123]

Interesting take on the Greek crisis from Thomas Piketty here:

https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff

One choice quote:

What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.


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[Calgary_Girl]

So what happens now? The markets should be interesting this week.


http://www.bloombergview.com/articles/2015-07-05/10-consequences-of-greece-s-no-


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[Texas Proud]

Interesting take on the Greek crisis from Thomas Piketty here:

https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff

One choice quote:

What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.


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I was reading the interview and it sounds like a bunch of malarkey.... he said they are charging high interest rates... but they are much lower than Greece could get on the open market if they could actually get loans on the open market...

I might agree more on the debt forgiveness if it were due to a war like the German debt (no mention of any other debt they did not pay).... but Greek debt is due to inefficiencies and corruption in their system.... why should they be rewarded for that As long as Greece is not willing to fix their internal problems, I doubt people are going to be willing to give them a helping hand...

 

[Fred123]

I was reading the interview and it sounds like a bunch of malarkey.... he said they are charging high interest rates... but they are much lower than Greece could get on the open market if they could actually get loans on the open market...

I might agree more on the debt forgiveness if it were due to a war like the German debt (no mention of any other debt they did not pay).... but Greek debt is due to inefficiencies and corruption in their system.... why should they be rewarded for that As long as Greece is not willing to fix their internal problems, I doubt people are going to be willing to give them a helping hand...

So debt should be forgiven if a country starts a war, but if it can't pay back the debt due to a corrupt government, then the citizens should suffer indefinitely? That's certainly an interesting take.

 

[misanman]

I'm pretty clueless about the US relationship to the IMF, but I'm guessing that we support the IMF financially to some extent. Does that mean that I'm subsidizing Greece via the favorable IMF loans? Or even more so if they do not repay? Just wondering.

 

[karluk]

The ugly side of the Greek crisis is rearing its head - it has inspired one writer to make a really baaaad pun. Still, for those who like their financial news accented with the smell of napalm...


‘Acropolis Now’ — stocks are toast - MarketWatch

 

[samclem]

The Greek Finance Minister has announced his resignation. Yanis Varoufakis was widely reviled by the other EU finance ministers during the previous negotiations, he's saying that he is stepping down in order to make future negotiations easier.

 

[ERD50]

So what happens now? The markets should be interesting this week. ...

Down less than 1% 5 minutes before the open. Not a big deal.

No, the euro remains just as flawed as ever. ...

I'm pretty sure this whole 'different governments - one currency' issue was a BIG concern at the start, it seems like an obvious problem. They will either figure it out going forward, or as one poster linked - Germany goes back to the DM, or something else.

Interesting take on the Greek crisis from Thomas Piketty here: ...

OK, but we can't fix today's problems by basing them on the sins of the past. Today's problems require today's solutions. We learn from the past, but we can't hold today's generation to issues of previous generations.

-ERD50

 

[prose3589]

I am very interested in this discussion. As for input, I don't have the macro economic knowledge that many of the other posters can share. From personal experience, I was in Greece just a few weeks ago. First trip. Generally, I thought the Greek people were kind, but Athens was deplorable. Crime and prostitution everywhere. We were stuck in the middle of a communist protest. I was with my young nieces and mother and I was on edge the whole time. I left Greece assuming I would never be back due to some type of civil unrest- and this was before the collapse.

Oh and as a side note- we couldn't find any business that took a credit card. Cash only.


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[JoeWras]

I am very interested in this discussion. As for input, I don't have the macro economic knowledge that many of the other posters can share. From personal experience, I was in Greece just a few weeks ago. First trip. Generally, I thought the Greek people were kind, but Athens was deplorable. Crime and prostitution everywhere. We were stuck in the middle of a communist protest. I was with my young nieces and mother and I was on edge the whole time. I left Greece assuming I would never be back due to some type of civil unrest- and this was before the collapse.

Oh and as a side note- we couldn't find any business that took a credit card. Cash only.


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Maybe you were in a different part of Athens than I. Or, maybe things decayed badly in a few weeks.

Was there at the beginning of May. They took credit cards. Didn't see or have any reports of crime. We were by the Parliament building. This may be a factor since the police presence is heavy there. We were there on May day and there was a Communist demonstration (surprise?) but it was pretty small.

 

[prose3589]

I was in the center. We stayed in the "good neighborhoods" and found them troubling. Buildings decaying everywhere. Only the hotel would take a credit card.

I have spent time world wide. I personally found Athens to be very run down and i was on edge. We went several places outside of Athens that were lovely.

Just my personal experience and it happened to be before the banking issues.


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[Fermion]

Except for oil, the market is a big yawn this morning. So much for the massive discount on stocks due to Greek problems.

 

[DEC-1982]

I was wrong in how I thought Greece would vote. But Greece is in trouble no matter what the outcome of the referendum.

Perhaps Europe will agree to a fiscal union. A monetary union without discipline is unlikely to work, and a fiscal union with one master over all countries' fiscal policy should work. "should" not "will".

 

[kcowan]

Here is a good summary of the dire shape that Greece is in:
Why Greece has to drop the Euro

It seems there is no way out. Massive devaluation voted for by the people.

 

[JoeWras]

I was in the center. We stayed in the "good neighborhoods" and found them troubling. Buildings decaying everywhere. Only the hotel would take a credit card.

I have spent time world wide. I personally found Athens to be very run down and i was on edge. We went several places outside of Athens that were lovely.

Just my personal experience and it happened to be before the banking issues.


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OK. I guess growing up in Chicago toughened me up to city issues.

Some of the "decay" you saw was a huge part of the problem Greece is facing. One of the most mind boggling things I saw in Greece were apparent buildings under construction that were not, and were occupied. It is one of the tax avoidance schemes that "everybody does." But it makes the place look like a country occupied by squatters.

 

[Tailgate]

Greece is now in the grease...

 

[Totoro]

I'm pretty clueless about the US relationship to the IMF, but I'm guessing that we support the IMF financially to some extent. Does that mean that I'm subsidizing Greece via the favorable IMF loans? Or even more so if they do not repay? Just wondering.

As far as I know (which is, unfortunately, also not that much), the IMF debt is senior to virtually all other debts. They will be repaid. It's the ECB (European Central Bank) that will have to write off losses for the most part.

The IMF is indeed funded with US money as well, and has a heavy US representation.

 

[Totoro]

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.

It was a well-known flaw at the launch of the Euro. Basically, the choice was a euro without the (long-term) necessary political and economic structure, or no euro.

If I remember well it was mostly Mitterand who forced the Germans to go along with the euro, but he couldn't get the platform to go any further. The assumption (prayer?) was that the flaws could be fixed afterwards.

They never were fixed.

 

[TimSF]

Greece is now calling for 30% debt forgiveness. It appears Greece must have a "debt haircut" if it is to move forward with the Euro. The Euro nations absolutely cannot allow this because it would embolden leftist groups in Spain and elsewhere to demand similar debt relief. In short, the EU cannot provide what Greece must have and "Grexit" thus appears all but inevitable.

 

[MichaelB]

Folks, let's keep the thread clean and respectful.

 

[Totoro]

Some of the "decay" you saw was a huge part of the problem Greece is facing. One of the most mind boggling things I saw in Greece were apparent buildings under construction that were not, and were occupied. It is one of the tax avoidance schemes that "everybody does." But it makes the place look like a country occupied by squatters.

Many countries have strange tax things like that. In Amsterdam it used to be the case that you paid taxes based on how wide your house was.

That's why it has so many narrow houses with twice or three times the depth of elsewhere.

In Spain some rural areas have old farms on them. If the old farm disappears, the land will become a natural park permanently and worthless. However, as long as the farm is still intact, there is a good chance it can be rezoned into an urban area eventually.

So you end up with an abandoned area of old farmhouses, just enough to keep it standing, in the hopes it will be a bonanza one day. Best chance for said bonanza by the way is having family ties with the local major ....

Never mind the empty tracts of perfectly good farm land that have to stay empty because the EU is paying the owner money to NOT plant olives on said land.

 

[explanade]

I was in the center. We stayed in the "good neighborhoods" and found them troubling. Buildings decaying everywhere. Only the hotel would take a credit card.

I have spent time world wide. I personally found Athens to be very run down and i was on edge. We went several places outside of Athens that were lovely.

Just my personal experience and it happened to be before the banking issues.


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I remember when I was still in elementary school, they were saying some of the famous ruins were deteriorating due to heavy pollution in Athens.

But I would have thought they used EU and other funds to restore all the big sites?

 

[ziggy29]

Clearly the market is expecting a resolution, given the lack of uncertainty-fueled panic.

 

[imoldernu]

Tangled webs...
With all of the emphasis on Greece and the European Union, it's easy to forget that world markets are affected by concurrent moves that don't immediately seem to be related.
China is in a somewhat unstable condition, as the Chinese Government has been doing the equivalent of quantitative easing, allowing investors low interest rates to borrow in leverage buying of Asian stocks, which now look to be overvalued. As the government attempts to slow the damage with more easing, the results may be uncertain. Chinese brokerage funds are joining to avoid a 1929 type crash. The Chinese market has doubled in the past year. Shanghai market PE ratios are super high, and therein lies the worry.

Not to change the subject, but it's not all about Greece, and the world markets may be bouncing around over the next two weeks as the Chinese shadow banking finds a base.

Just sayin'

 

[Lsbcal]

Clearly the market is expecting a resolution, given the lack of uncertainty-fueled panic.

What we don't know is how much the market has built in expectations of a default and Greek exit. Since the bonds are close to 16% now, maybe this is mostly discounted?