Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

 jhe90 wrote:
Greece is free to choose, rather hard for some governments they are giving away there own tax payers hard earned money basically free, money the could be spent on own citizens and services.
They have to think about voters and the bigger picture too.

Problem is the government had not tightened their belt as good as they should have or privatized as directed.
Also their people had been rather aggressive in avoiding giving their hard earned money to taxes.
Private businesses have largely been an issue for that.

They want to get relected and that means giving fortunes into a black hole is not going to win any favours in your own country.

The problem of wanting to be reelected has caused the spending deficits for decades.
The problem now is it is bordering on impossible to pay it off.
Increased interest rates to combat Germany's inflation is what caused this to happen sooner rather than later.
What is staggering is the amount of debt generated by a population of only 11 million.
Never mind the interest, or debt to pay interest: just the principal debts.

Looking at the dynamics of running the euro, it is in the best interests of the weaker economies to exit the currency.

True, quick answer you have a one speed currency yews there are 3 maybe 4 speeds of countries, and setting it at one speed hurts the others, the average speed is a compromise whichworks OK but its not fine tuned to anyone's economy.

Otherwise you may be stuck in a convoy at the slowest ship so to speak and that hurts the main fast ships that are not working at best efficiency. Or you leave the slower behind.

It needs a secondary euro, aloe speed and high speed, what's goods for Greece is not good for Germany and visa versa.

The "speed" is called your own currency.
Devalued enhances competitive pricing and gives some handle on labor rates.
Having control of printing more money or not is not to be underestimated.
Their citizens have been stashing their money out of country starving their banks and they are not allowed to put controls in place due to the rules for euro use.

The Greeks may have sunk anyway but at least they would have had full control and only themselves to blame.
It was already bad prior to joining the euro and made hiding their issues easier.

First poll results show a 2,5-3,5% advantage for the "No" sayers.
So that's something like
48-49% YES
51-52% NO

Great... Just swell... :-/

Not best paper but hmm brace for impact Shieldwolf, things may get rough.
http://www.dailymail.co.uk/news/article-3149848/Greek-army-riot-police-braced-street-battles-millions-polls-country-s-bailout-referendum-result-close-call.html

Potential 20% lead for no campaign.

Hmmm... exit polls have done it again.
New results show
60% "no"
40% "yes"

Well, at least the result is more clear now.
Good luck to us all in the next 48 hours, Greek Prime Minister Tsipras has promised a deal within 48 hours, this means by Tuesday night.
Let's see how things work out, 11,000,000 Greeks are holding their breaths...

If true well alls on your Prime Minister, he started this gamble and he has to be the one to finish it.

But in slightly off topic is bodes interesting for UK as if Greece can decide to stand up to EU, our referendum and future chained to Brussels unelected burocrats may change.

Yes, however this turns out, I expect the EU status quo is likely to be severely shaken up.

I guess it's too much to hope that Tsipras would kick the EU representatives down a well while yelling "This is Sparta!"?

Looks like it's safe to open my bottle of retsina.

 AlmightyWalrus wrote:
I guess it's too much to hope that Tsipras would kick the EU representatives down a well while yelling "This is Sparta!"?

Lol! :-D

 lord_blackfang wrote:
Looks like it's safe to open my bottle of retsina.

Don't be quick to celebrate, the results of "NO" to austerity and the EU proposals have been kicked out, but that doesn't mean Tsipras has pulled this through yet. We still need to see what's the deal he'll be bringing back now. If any that is (although some deal will be struck imo)...

 welshhoppo wrote:
@Sebster.

That's my point, when you have differbwt countries under one currency, especially countries that were killing each other in living memory, things don't go very well.

Sure, just you said it was different sizes causing the issue, and I pointed out it wasn’t size but the related fiscal policy that really mattered. But if we’re on the same page it’s all cool.

As a very small nitpick, though, I’d say it isn’t so much about being willing to help, as about the help that automatically happens. Puerto Rico is economic poo right now, but as it is fiscally attached to the US, there are automatic offset that happen automatically – less taxes paid to Washington, and more welfare money flowing from Washington. The result is economic hardship, but not catastrophe like Greece.

 Grey Templar wrote:
Sure, thats what I said in the first place. Not sure why you were trying to correct me when what I said was correct.

You didn’t, but whatever.

Much of the shocking revealation to me. Greece has been in an arms race (against Turkey) since 2009. by then BOTH countries are in Eurozone and the needs of arms race against each other should not exists.
http://www.wsj.com/articles/SB10001424052748703636404575352991108208712
While many in Thailand blams populism is responsible for Greek crisis, this recent revealations should provide different perspective on what brought the Greek crisis. Greece economy is NOT really quite strong, lack of manufacturing industry, low agricultural output in europe. heavily dependence on tourism industry (Many comes to Greece to see classical worlds, like Sparta, Athens, Oracle of Pythia, Olympus, etc.. i'm not sure how many greeks knew that these old world site within Helenic sphere exists not only WIHTIN the modern boundary of Greece, but also its neighbours such as Turkey, and Cyprus. (where it is said that Aphrodite Rock stands)


The serious competitions came when the rest of Balkans has been pacified and open for business. when these neighbouring countries began economic redevelopments.. inducing both tourists and investors. Greece governments, and the Greeks did very little to improve themselves to meet these challenges. Government budgets that should be allocated to infrastructure, manufacturing developments (including citizen competency against its rivals like Turkey) were misleadingly allocated to its Military. Some numbers of submarines bought from Germany (including one unfinished unit.... don't say that Greeks do have U-Boats!) intended to fight Turkish Navy, 1,400 or so Tanks (second only to the British Army, but i'm not sure if these tanks are modern or early cold-war era?) A high percentage compares to its weak GDP.... Remember that Greek Military Junta was long gone. why not the arms race which the Junta leaders earn kickbacks per each weapons purchase??.

if this aggressive military spending is not enough to ruin Greece. how about this...

https://www.facebook.com/horawasu/posts/492038970964309

This man said that aside of heavy military budget. Greek Burgeons aren't productive people (and not striving to improve themselves to become so)...that instead of working hard and self improvements, much of them invest so much in quick fortures of stock markets and speculation-based economy. in which real productions doesn't belong to. In Addition of the heavy military spendings i've said above, Greece is a country that has more number of bureaucrats and government agents than private-sector workforces....

Looks like Varoufakis is out, does that look to anyone else like bad cop/good cop play?

Varoufakis is/was Minister of Finance?

I think his position became untenable once this vote went against the current bailout plan for several reasons.

The Greek economy is now a train headed for the terminal buffers at increasing speed, and the prime minister is pushing on the throttle.

If this piece of brinkmanship deos not work, there will be a very nasty mess.

The banks seem a bit messed up. The reason you charge higher or lower amounts of interest on a loan is because of the increased risk of it not being paid off.

That's how interest rates work isn't' it. If you're still going to make sure you're paid off anyway then there's no justification for higher rates of interest.

Greece was a bad bet and now I can't help feeling that its time for the banks to take the pain of losing that money.

Can Greece really recover with that debt in place. Would a better thing be to freeze the debt and interest. Then concentrate on getting Greece profitable again. Look at paying back the debt in 50/100 years or so?

I guess if you did that you'd have to do it other EU countries too. Greece can't be given a special pass and other countries have to stick at it... Glad I'm not in charge

Yes, the "brinksmanship" can go both ways.

Greece:
Greece owes money and they want a bunch of it "forgiven" as well as better terms.
Other than the getting money forgiven they are pretty much over their head of what can be paid off.
Greece will now have to exit the euro if they are to have any chance of doing what they need to survive or we will be seeing this same thing happen in under a year.

EU / IMF / Germany-France
Those who extended the loans now need to figure out how to get some measure of money out of the Greeks before they default / go bankrupt / go into sky-high inflation.
Luckily they increased interest rates to hedge against default (really to combat Germany inflation) while also ensuring it happened sooner.
They need to make it sufficiently painful (to make an example of them) so that other EU members do not get any ideas and toe the line... or else.
I think Greece is not aware that EU does not want to set any precedents so their "negotiations" will be less effective then they are hoping I think (Portugal is watching...).

As best I can tell, there was no official provision made on how to exit the euro so this will not be an amicable divorce.

Time is ticking, Greece cannot print it's own money, it's people have been funneling their money out of country for years so their banks will be tapped-out sooner rather than later.
There are just no tools for keeping euro coin in the country and commerce will stop dead, then the starvation will begin.

Greece should not be under the illusion they are in a position of dictating terms.
The "people have spoken" lord have mercy on their economy: it is on their heads.

If there are no Euros in the country, the government will have to print its own money or people will be unable to carry out transactions and the economy will cease except at the level of local barter, which doesn't function in a modern society. (The ancient Greeks had cash 2,500 years ago.)

I assume the Greek government can't just print more Euros or they would have done it already to pay back their debt. Therefore they will have to start printing drachmas.

Ironically, judging from the referendum result, a lot of Greeks might refuse to accept new drachmas as legal tender.

I don't understand why they had a referendum vote anyway.

People are sheep.

Economists should figure out what to do and just do it.

But I guess Politicians were CYA by having a vote and then they can say the people voted for it. Course, it's not exactly going the right way now.

 Kilkrazy wrote:
If there are no Euros in the country, the government will have to print its own money or people will be unable to carry out transactions and the economy will cease except at the level of local barter, which doesn't function in a modern society. (The ancient Greeks had cash 2,500 years ago.)
I assume the Greek government can't just print more Euros or they would have done it already to pay back their debt. Therefore they will have to start printing drachmas.

It is all about having a common currency: strict controls on printing.
They are stuck with hemorrhaging euros out of their country faster than any going in, especially with tourists unable to get at their money there.

Ironically, judging from the referendum result, a lot of Greeks might refuse to accept new drachmas as legal tender.

This steams me up a bit.
They had not committed to fiscal responsibility for over a decade that were in the terms for euro use, they are up to their eyeballs in debt and by being tied to the euro is what nailed them with higher interest rates they could not afford.
The choice will be drachmas or local barter will be all they have.

I have not heard anyone take a run at this: Greece will lose use of the euro or will be a slave to continuous, unsustainable debt, is there really any other choice?

For those who claim they love their country they sure find every way to stick it to their own government or anyone they owe money or expect money from.

 KiloFiX wrote:
I don't understand why they had a referendum vote anyway.

People are sheep.

Economists should figure out what to do and just do it.

But I guess Politicians were CYA by having a vote and then they can say the people voted for it. Course, it's not exactly going the right way now.

You'd have a point if economics weren't a jumbled mess of a field and everyone agreed on what had to be done.

 obsidianaura wrote:
The banks seem a bit messed up. The reason you charge higher or lower amounts of interest on a loan is because of the increased risk of it not being paid off.

That's how interest rates work isn't' it. If you're still going to make sure you're paid off anyway then there's no justification for higher rates of interest.

Greece was a bad bet and now I can't help feeling that its time for the banks to take the pain of losing that money.

There is a point where you get so rich that you can't lose money. You don't have to pay taxes (but you demand that the poor do), you don't have to pay back loans (but you demand that the poor do) and you always get your own loans back (but you can deny that right to the poor). If your debtors can't pay you back, your government buddies will just force random other people to pay you back. And your media buddies will convince the rabble that you're the victim.

For the people who got weirdly angry when I said Greece couldn’t ever repay it’s debt – well the IMF’s just come out and said the same thing. Their draft statement was full if bits about Greece not meeting reforms and stuff, but that’s just political spin – the IMF is part of the troika afterall – but look past that and the IMF’s technical statement is plainly clear.

Anyway, it’s not as though I or anyone else who was talking about the need for Greek debt relief had any kind of special insight. What I was saying at the time was pretty fething obvious. But the troika and most of Europe didn’t like that reality so they ignored it, behind the scenes there was even a large fight to get this draft report quashed.

The result of that wilful ignorance was more calls for Greek austerity, which only collapsed the Greek economy further, making debt repayment even less likely.


Automatically Appended Next Post:

 KiloFiX wrote:
I don't understand why they had a referendum vote anyway.

People are sheep.

Except that Greece is a democracy. Previous governments in Greece came to power with promises to fight the troika’s demands, only to acquiesce once in power, and then getting booted at the next election. This current government isn’t caving, and the referendum was to show that their approach is popular in Greece and that the troika will have to deal with them.

Economists should figure out what to do and just do it.

Economists, and the political leaders who take or ignore their advice, are often just as ideological and well, stupidly wrong, as the common man.


Automatically Appended Next Post:

 Talizvar wrote:
This steams me up a bit.
They had not committed to fiscal responsibility for over a decade that were in the terms for euro use, they are up to their eyeballs in debt and by being tied to the euro is what nailed them with higher interest rates they could not afford.

The story about Greek fiscal irresponsibility is a myth. Debt was fairly close to static for 15 years;

Now, there’s a case that can be made that Greece should have been working its debt down over that period, but that’s hardly a unique failing to Greece, and certainly not a big enough mistake that Greece could be expected to end up like this.

Nah, the problem here is the Euro and the surrounding political structures. This isn’t something that can only happen to Greece.

Would Greece have avoided the problem by sticking with the Drachma?

I'm just waiting to see how this financially kicks the crap out of other countries. This is going to suck for all.

 Kilkrazy wrote:
Would Greece have avoided the problem by sticking with the Drachma?

There still would have been a recession, but Greece would have been able to use the standard measures to escape - devaluing their own currency. That would have restored competitiveness, and also reduced the real value of the debt they owed (though it would have hurt the interest rates of new debt).

 lord_blackfang wrote:

 obsidianaura wrote:
The banks seem a bit messed up. The reason you charge higher or lower amounts of interest on a loan is because of the increased risk of it not being paid off.

That's how interest rates work isn't' it. If you're still going to make sure you're paid off anyway then there's no justification for higher rates of interest.

Greece was a bad bet and now I can't help feeling that its time for the banks to take the pain of losing that money.

There is a point where you get so rich that you can't lose money. You don't have to pay taxes (but you demand that the poor do), you don't have to pay back loans (but you demand that the poor do) and you always get your own loans back (but you can deny that right to the poor). If your debtors can't pay you back, your government buddies will just force random other people to pay you back. And your media buddies will convince the rabble that you're the victim.

You would be surprised how much propaganda came out of the media in just a week. In fact it was so much, the government officials after the referendum results have come hammering down on them every chance they get, saying it in the face of these journalists. That's just so so so sweet :-D
And this comes from a person that voted "Yes". We'll see and hope what the future has in store for Greece.

I respect the final verdict of "No" and will back it 100%. Strength through unity.

According to OECD figures for 2010, 89.5% of the tax receipts due went uncollected.
Here's an experiment, burn 89.5% of your pay-cheque, each month but continue spending at the same rate, see how long it takes for your bank manager to pull your credit cards......

 Da Boss wrote:
I believe Greece could have been saved if the political will had been there. It wasn't.

I mean, the real question is, why did Germany not want this badly enough?

To generalise unfairly, the German electorate have come to regard Greece as a nation of lazy money grubbers (another unfair generalisation) who have sucked up more than enough German tax Euros and they want it back. Therefore Merkel is under pressure similar to the Greek prime minister but shoving in the opposite direction.