Greece will default

[FluffyMcDeath]

 

[metalman]

Anyone who lends Greece any money is deluded if they think they have any prospect of seeing any of it again.
The Greek unions are rioting when they are just asked to move towards living within their means, what will happen when they are actually required to pay some of the money back? Greek repayment isn’t going to happen.

French banks are holding 56.7 billion euros of Greek debt. Where will more gullible lenders be found before Greece is finally forced to default?

The yield on Greece’s two-year bond, which topped 30 percent on June 16, fell 90 basis points to 28.79 percent the on June 17th. Estimates put Greece’s 2012-14 financing gap at as much as 170 billion euros ($243 billion).

 

[Robert]

The Greek unions are rioting when they are just asked to move towards living within their means,

Indeed - huge cuts to pay, pensions and public services. Thousands laid off. Meanwhile food, fuel and clothing prices are soaring.

What an ungrateful bunch.

 

[FluffyMcDeath]

Anyone who lends Greece any money is deluded if they think they have any prospect of seeing any of it again.

Anyone who lent Greece money was delusional. They should just swallow hard and take the haircut that's coming. The big German banks were lending the Greeks money to buy German goods. Good for the German manufacturers, stupid for the banks - they deserve to get spanked.

You can try to make the case that the borrowers should pay but that which is impossible won't happen. Sometimes the "investors" who think they are so smart should face the music. If you lend a sack of hundred dollar bills to a goat you could argue that the goat shouldn't have eaten them, but you'd still be an idiot.

 

[the_leander]

Following the greek theme, I came across this, this afternoon.

BEING the German equivalent of the Sun, there is no particular reason to believe that Bild has got any special hotline to Langley, Virginia. But for what it’s worth, the claim that the Central Intelligence Agency sees a military coup in Greece as possible has recently surfaced among that publication’s endless stream of topless girlie pics.

Even Britain’s rather more staid Investors Chronicle has run with the story, so the idea is obviously being taken seriously in some quarters, and there’s no denying that the colonels have got form on this one. If the rioting gets out of hand and threatens a re-run of Argentina in early 2002, a declaration of martial law cannot be out of the question.

No matter how you swing it, excretia and fan blades are going to hit real soon I think.

 

[Glaucus]

I know it doesn't matter what Greeks think, but let me offer my views on all this anyway.

First of all, this video is highly biased, no better then any Fox News report I've seen. A left wing media outlet presenting only the left wing perspective without any challenge at all. It's the type of "news" only left wingers would care to sit through which means it's just preaching to the choir. Total net newsworthiness: zilch.

But ignoring that, lets take a moment to think about what they are saying. Basically, in a nutshell, Greece is in the trouble that it's in because of capitalism and the only solution is socialism. Now for some reality check: 1) Europe in general is considered socialist, but Greece in particular is very much a socialist nation and has been for some time. 2) The government that performed the shady currency swap deals with Goldman Sachs was a socialist government. 3) The government in power today is also a socialist government. So I'm left scratching my head here how much more socialist must Greece be before it's immune from the evils of capitalism? I would argue the opposite actually. Greece was too socialist and the population in general kept thinking of the government as their own personal ATM. It got so bad that the government itself adopted the same mentality and treated the EU the same way. In Greece loans were not seen as debt but as income.

As for who to blame for Greece, well, it's good to see everyone has their own little agendas and are willing to smash Greece to pieces so they can defend or destroy the thing called capitalism (yes, it seems both sides seem to think it's in their best interests to have Greece just default and get it over with). Neither side seems to care about the people or wish to discuss the full consequences of a default on to the Greeks themselves. To make matters worse Greek politicians are mucking things up as well, some promising that they could somehow renegotiate all the debt in a much more favorable way so as to avoid any austerity. Of course this is nonsense, Greeks have only two choices: 1) a self imposed austerity where the nation slims down, cuts out the fat and strengthens itself for the future, or 2) a poverty imposed austerity where the nation slims down to a weakened and vulnerable state that it may be stuck in for decades. Either way austerity is in the future for Greece and the banks will get their money - either on schedule or delayed and with more interest, but they will get it. So no bank will learn any lessons from this crisis but a nation may be destroyed. The unions will also not learn any lessons either as it's much easier for them to skirt any responsibility and have been clever to position themselves as the only opponent to the unpopular politicians. They continue to sabotage Greece's main industry, tourism, at a time when it needs it most. Tourists avoid Greece for fear of not just riots in Athens, but of more mundane things like being stranded on an island (or never getting to one) due to constant strikes. There never really was any attempt to work together to make the best of a bad situation, instead they did all they could to make things worse for everyone so that a few could get what they wanted.

Will Greece default? Right now it does look like it will. I hope it doesn't but there's really not much realistic hope. Greece has a new finance minister today and he may be better then the previous one at building market confidence, but I doubt it. If there isn't a big change anytime soon, I think Greece will be doomed. What happens this week may be telling as to how things pan out. If you're actually interested in Greece and not just pushing an agenda, I'd suggest starting with something like this: Is there a way out?

 

[Glaucus]

Anyone who lent Greece money was delusional. They should just swallow hard and take the haircut that's coming. The big German banks were lending the Greeks money to buy German goods. Good for the German manufacturers, stupid for the banks - they deserve to get spanked.

You can try to make the case that the borrowers should pay but that which is impossible won't happen. Sometimes the "investors" who think they are so smart should face the music. If you lend a sack of hundred dollar bills to a goat you could argue that the goat shouldn't have eaten them, but you'd still be an idiot.

Turkey was an economic basket case for years, but they turned it around quite nicely. No reason to believe that Greece hadn't done the same back in 2000, especially when they did such a great job of cooking books (they found ways to not include costs of the military and the medical system). And as for German banks, well, it might surprise you that the bank that bought the Goldman Sachs orchestrated currency swaps was a Greek bank. http://www.spiegel.de/international/europe/0,1518,676634,00.html

 

[Robert]

Now for some reality check: 1) Europe in general is considered socialist..

Reality? Fantasy, more like.
Europe is only considered socialist by people whose definition of socialism is skewed.
Europe is mostly capitalist.
Maybe, "slightly more socialist than the USA," but that could just as easily be written as "slightly less capitalist than the USA," and is hardly a good barometer.

 

[the_leander]

Reality? Fantasy, more like.
Europe is only considered socialist by people whose definition of socialism is skewed.
Europe is mostly capitalist.
Maybe, "slightly more socialist than the USA," but that could just as easily be written as "slightly less capitalist than the USA," and is hardly a good barometer.

Especially given the rise of far right parties throughout the EU over the past five or more years.

 

[redrumloa]

Reality? Fantasy, more like.
Europe is only considered socialist by people whose definition of socialism is skewed.
Europe is mostly capitalist.
Maybe, "slightly more socialist than the USA," but that could just as easily be written as "slightly less capitalist than the USA," and is hardly a good barometer.

Sorry Robert, I have to go with Mike on this one.

 

[Glaucus]

Reality? Fantasy, more like.
Europe is only considered socialist by people whose definition of socialism is skewed.
Europe is mostly capitalist.
Maybe, "slightly more socialist than the USA," but that could just as easily be written as "slightly less capitalist than the USA," and is hardly a good barometer.

Well let's keep some context here. The original video here was two Canadians talking about Greece's problems. From a Canadian perspective, the EU is pretty socialist. It's a land of stronger unions and social programs that simply don't exist in a place like the USA. It might not be a socialists dream world, just like the USA isn't a capitalists dream world, but it's probably as close as you'll get in the Western world.

 

[metalman]

Europe is only considered socialist by people whose definition of socialism is skewed.
Europe is mostly capitalist.

:ROFL:

@Glaucus +1

 

[Robert]

From a Canadian perspective, the EU is pretty socialist.

Really?

Greece might be a bit more socialist than Canada but I doubt the EU as a whole is.

Here in the UK we are not. Certainly not to any obvious degree.

Neither are Germany, Spain, Austria, Italy, Holland, Luxembourg or Portugal.

Take that lot out and you don't have an EU, so I dispute your point.

-EDIT-
It's also my understanding that Greece has a system that allows the rich to avoid paying a lot of their tax but not the poor. This is anytrhing but 'socialist'.

 

[Robert]

@Jim & MM:

I think we might have a language barrier here.

What you see as socialist, I see as right of centre.
Given that both of you think Obama is a socialist, whilst I think he's right of centre, that's no real surprise.

-EDIT-
As an aside, and it might not have been either of you two, we have had a poster on here claim the Nazis were socialist, because "that's what they called themselves."

That kind of idiocy isn't even worth arguing with.

 

[Robert]

The absurdity measures have just been voted through whilst chaotic scenes continued outside.

 

[Glaucus]

-EDIT-
It's also my understanding that Greece has a system that allows the rich to avoid paying a lot of their tax but not the poor. This is anytrhing but 'socialist'.

Correct, I wasn't trying to imply Greece or the EU are textbook examples of Socialism in their purest form. Fact is, that doesn't exist anywhere and socialist advocates will tell you that the entire planet needs to be socialist for pure socialism to work properly and to last forever. Part of the reason for that is for socialism to really work you need EVERYONE to work together without cut throat competition getting in the way, and even a little competition can ruin it for everyone. That is of course the Achilles heal (keeping with the Greek theme) of socialism and why you'll never get it in it's purest form as detailed in the textbooks. But pragmatic socialists don't really shoot for the purest form, so you end up with what we have in Greece where competition is just dramatically reduced. For example, the number of truck drivers in the nation is fixed. You can't just buy a truck and start hauling things around even if you've completed every government training program. No, if you do that the Union will knock on your door and make sure you see it their way. Only way to become a truck driver in Greece is to buy that "license" from an existing truck driver - and it's not cheap. This means that truck drivers don't really need to worry about customer relations so much because there's not much competition to worry about, and what little competition there is sees things the same way anyway. Funny how they all charge the same no matter what. Great for the truck drivers, not great for anyone else. Luckily, that's one of the things changing with these austerity laws (actually, that happened about a year ago, but still demonstrates how bad things were).

The big problem with what is happening in the streets of Athens today is that it's all happening too fast. Many of the changes needed to happen years ago. It's too much shock, so I don't blame them for being upset. But they do need to realize choosing to default is a far worse option. There's no easy solution here, Greeks need to choose the lesser evil.

 

[minator]

On an economic scale USA is to the right, mainland Europe to the left and the UK is somewhere in the middle.
I don't know where Greece sits but their problem is that they have a european style social system but they don't have the tax collecting system to pay for it. Greece defaulting is a major problem for the EU and the Euro in particular so if a default looks likely, expect help to suddenly appear at the last minute.

Left and right wing are not very good definitions as their meanings mix up economic policy with entirely unrelated things. It's quite possible to be both very far right wing and very far left wing at the same time.
There's a site called political compass that divides the definitions into two axis and that makes a lot more sense.

As for the Nazis, economically they were far more to the left than any of the current European governments.
However, the Nazi's defined themselves by hate. The fact they were left wing economically is really quite irrelevant.

 

[FluffyMcDeath]

First of all, this video is highly biased, no better then any Fox News report I've seen. A left wing media outlet presenting only the left wing perspective without any challenge at all. It's the type of "news" only left wingers would care to sit through ...

Guess that's why it sounds to me like you didn't watch it.

But ignoring that, lets take a moment to think about what they are saying. Basically, in a nutshell, Greece is in the trouble that it's in because of capitalism and the only solution is socialism.

Strange, sounded to me like the reasons they said Greece was in trouble was because of financial predation and the fact that people don't pay their taxes (especially the Greeks that have the most money).

You keep saying that default would be the worst thing for the Greeks but you, as far as I can recall, haven't said why that would be. Defaulting and dropping out of the Euro and going back to their own currency with their own public bank would not perhaps give them the quality of life that many of them have come to expect now but that quality of life was not evenly distributed and was mostly borrowed anyway. You cannot indefinitely maintain a way of life that requires constant borrowing. Ask the US.

Also you seem to think (and it is a common position) that what the financiers did has anything to do with capitalism. Financial assets are only vaguely related to capital and part of the problem is that there were more claims on capital than capital in existence.

 

[FluffyMcDeath]

Here's how it goes Mike.

The Greeks can't pay their debts. The bailout doesn't pay their debts. The bail out just floats the debts by refinancing the current debt plus interest. The government, for the privilege of this loan, must sell off everything that the state owns. None of the bailout money and very little of the privatization money will go into the Greek economy. Next year, unless the banks are willing to extend negative interest loans, the Greeks still can't pay. Default is inevitable. The question is, do you want to default while you are still relatively free or after you have sold everything you have and become slaves?

Iceland has already defaulted and they are doing OK. They told the bank bond holders to take a flying leap.
Ireland has told the bond holders to take a severe haircut so they are technically talking about default too. If they can cram the haircut through they will do fine.
Greece needs to default now instead of waiting to default later. They cannot pay, they will not be able to pay in the future. That which is impossible will not happen.

 

[Glaucus]

Ya, Iceland is doing great. 6 months ago I helped a family from Iceland move to Winnipeg because Iceland was a wasteland as far as they were concerned. Greece too will be fine once everyone leaves.