# Greek default seems to be inevitable...what's the fallout? **URL:** \ **Category:** Great Debates\ **Created:** [June 29, 2015, 8:24pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811 "2015-06-29T20:24:18Z")\ **Posts on this page:** 20\ **Page:** 18
**Author:** ![up\_the\_junction](https://avatars.discourse-cdn.com/v4/letter/u/f1d935/32.png) [@up\_the\_junction](https://boards.straightdope.com/u/up_the_junction)\ **Post date:** [July 8, 2015, 7:32pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/341 "2015-07-08T19:32:25Z")
As the Greek leader said today, it feels like Greece is being used as a lab experiment. And in case I haven’t mentioned it recently: fuck the Germans. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [July 8, 2015, 7:46pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/342 "2015-07-08T19:46:36Z")
> [@Hiker](#): > > Are you sure they don’t? I was under the impression that the opposite is the case. These countries want greater fiscal integration. - Then again it probably comes down what “fiscal integration” means to you. If it only means that the entire Eurozone vouches for credits given to its members, while each government can freely decide how much it borrows and what it spends the money on, then you are right. But fiscal integration would have to also mean that individual countries hand part of the control over their fiscal policy over to a central governing body. The problem is to agree on what that governing bodies guiding principles would be. The strict fiscal discipline preferred by most of the northern countries or a more “Keynesian” approach to stimulate economy? > > As I see it, noone is opposed to greater fiscal integration. There just is no agreement on the terms of it. If they fiscally integrate and adopt policies that eschew counter-cyclic fiscal policy (either discretionary or via automatic stabilizers) then that would… not solve the macroeconomic problems associated with a common currency. It could even make them worse depending upon the details of the plan. Textbook economics says that economies are subject to periodic shocks and that they require some method of self-correction. Give up currency depreciation, and you create a greater need for countercyclic fiscal policies or other stabilization mechanisms. Incidentally, fiscal policy doesn’t work especially well with small open economies with floating exchange rates. So it’s unsurprising that some of the smaller countries in the Eurozone are skeptical of it. > [@CarnalK](#): > > So does anyone actually talk about how they’re going to imlrove the Greek economy. It’s kind of ridiculous how debt relief and government spending is the sole focus of this crisis. If you can’t get a real economy working none of this will help, even if the debt was completely forgiven and the gov slashes to the bone. No? Agreed. Also, if Greece can achieve economic growth _not adjusted for inflation_ of 2%, then they are solvent according to a link I provided earlier. That is not high at all. The best policy would be to cut long run spending (i.e. Greek pensions) while increasing short term spending. That assumes they stay within the Euro, which they won’t. Otherwise, leaving the Euro will help them over the next 2 years, though the transition will probably be awful. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 8, 2015, 8:00pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/343 "2015-07-08T20:00:00Z")
> [@camille](#): > > [Here](http://www.telegraph.co.uk/finance/economics/11724924/Europe-is-blowing-itself-apart-over-Greece-and-nobody-can-stop-it.html) is another theory: > > I don’t know what to believe anymore, but would explain why they had no plan ready. Now\* that’s\* a conspiracy theory! I don’t think that’s what happened. ---
**Author:** ![ralfy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ralfy/32/600_2.png) [@ralfy](https://boards.straightdope.com/u/ralfy)\ **Post date:** [July 9, 2015, 1:45am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/344 "2015-07-09T01:45:02Z")
> [@Dr.Drake](#): > > That it’s all a vast conspiracy? Now, why would the media not tell us that? I know—another conspiracy! And if there are two conspiracies, _there must be a third_. Send $5 to Box 12345 and you’ll learn what it is. You’ll be shocked, but knowing the answer is key to your personal wealth and safety. It’s likely because mainstream media are controlled by a few corporations with ties to financiers. It’s not surprising to see the same for the global economy: > **[Revealed – the capitalist network that runs the world](https://www.newscientist.com/article/mg21228354-500-revealed-the-capitalist-network-that-runs-the-world/)** > > As anti-capitalist protesters take to the streets, mathematics has teased apart the global economic network to show who's really pulling the strings ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [July 9, 2015, 3:56am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/345 "2015-07-09T03:56:17Z")
> [@foolsguinea](#): > > Now\* that’s\* a conspiracy theory! I don’t think that’s what happened. If he intended to win then one would expect a solution in hand. ---
**Author:** ![Hiker](https://avatars.discourse-cdn.com/v4/letter/h/3be4f8/32.png) [@Hiker](https://boards.straightdope.com/u/Hiker)\ **Post date:** [July 9, 2015, 5:30am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/346 "2015-07-09T05:30:42Z")
> [@foolsguinea](#): > > Exactly. A lot of the discussion (not just here but in Europe) is distracted by the blame game, instead of examining the abject failure of troika-recommended austerity measures to help Greece’s economy recover. So are you \*not \*playing the blame game - or are you blaming the troika? ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 9, 2015, 5:33am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/347 "2015-07-09T05:33:40Z")
Of course austerity doesn’t work. I don’t know that anyone claimed it would work, at least in the sense of reviving Greece’s economy. The only way to revive Greece’s economy would be massive aid from EU countries. At which point Greece would return to its bad habits and have a crisis the next time there was a recession. ---
**Author:** ![Donnerwetter](https://avatars.discourse-cdn.com/v4/letter/d/b2d939/32.png) [@Donnerwetter](https://boards.straightdope.com/u/Donnerwetter)\ **Post date:** [July 9, 2015, 8:13am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/348 "2015-07-09T08:13:18Z")
Here’s a perspective from one of the economic powerhouses in South America: [Venezuela’s Maduro: Victory in Greece is also Triumph for Latin America](http://venezuelanalysis.com/news/11435) > [@](#): > > “I’ve already spoken to the ambassadors here and they are telling me that this victory is irreversible, the Greek people are already in the streets celebrating their victory, which we consider to be our victory as well, the brave people of Latin America, long live Greece! Long live Alexis Tsipras!” declared Maduro from a televised act in the country’s National Assembly attended by the Greek ambassador to Caracas on Sunday. > > […] > > Former Venezuelan president and leader of the Bolivarian revolution, Hugo Chavez, in particular has previously been named by Tsipras as a source of admiration and inspiration. > > […] > > “The people are speaking, just like the people of Venezuela in 1989, today the people of Greece spoke,” stated the president of the Venezuelan National Assembly, Diosdado Cabello. ---
**Author:** ![Velocity](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/velocity/32/18006_2.png) [@Velocity](https://boards.straightdope.com/u/Velocity)\ **Post date:** [July 10, 2015, 2:26am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/349 "2015-07-10T02:26:36Z")
If Greece ever gets out of this mess, the Greeks might finally be allergic to national debt for decades to come. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 10, 2015, 3:30am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/350 "2015-07-10T03:30:14Z")
> [@Hiker](#): > > So are you \*not \*playing the blame game - or are you blaming the troika? Ah, _touché._ The blame game I was referring to was the matter of how Greece ended up so spectacularly in debt. (Although it appears to have become a habit of the governments before Syriza to run very large deficits for some reason.) I blame the troika for causing a deeper depression with their recommendations. I don’t see what that was meant to accomplish, realistically. The Greeks are probably too proud a culture to be broken into being good northern European Calvinists, or whatever the hope was. I think it couldn’t help but backfire. Maybe we need a little bit of a blame game. The troika made themselves the bad guys in many eyes, but if Greece is to reform, they need to see their own flaws as the problem. I still don’t think cutting public spending is a good idea in a depressed economy. I was reading some about this elsewhere, and it was claimed that Greek shops largely sell things without collecting tax. If that’s true, trying to solve the budget problems with VAT looks like a fool’s errand. Greece may have to write a tax code that works better for their culture. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 10, 2015, 3:49am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/351 "2015-07-10T03:49:06Z")
The idea wasn’t to cause a depression, but to make Greece act responsibly. A bailout does not encourage responsibility, it just means Greece will be a permanent dependent state. There is no solution that prevents a depression while also making Greece act more responsibly. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [July 10, 2015, 6:18am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/352 "2015-07-10T06:18:42Z")
a) Yeah, just like South Carolina which _consistently_ receives $5 of federal spending for every dollar sent back to the center. b) Greece could delink themselves to the Euro, devalue and repudiate/renegotiate debt. No dependency, and they would be on their own with regards to reform. > [@foolsguinea](#): > > Maybe we need a little bit of a blame game. Actually the way to win the [Blame Game](http://www.gocomics.com/tomthedancingbug/2005/09/24) is to deny you’re playing it. “I’m not pointing fingers. I’m simply calling on the Troika to stand up, stop attaching shackles to the Greek economy, engage in serious negotiation and stop playing the Blame Game.” (Move ahead 5 spaces). ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 10, 2015, 6:21am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/353 "2015-07-10T06:21:11Z")
The EU is not a country. German taxpayers have no responsibility towards Greece the way New York taxpayers do towards South Carolina. That being said, states do get into fiscal trouble and for the most part have to solve their fiscal problems themselves. ---
**Author:** ![Donnerwetter](https://avatars.discourse-cdn.com/v4/letter/d/b2d939/32.png) [@Donnerwetter](https://boards.straightdope.com/u/Donnerwetter)\ **Post date:** [July 10, 2015, 6:42am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/354 "2015-07-10T06:42:15Z")
> [@Measure\_for\_Measure](#): > > a) Yeah, just like South Carolina which _consistently_ receives $5 of federal spending for every dollar sent back to the center. The problem with that comparison is that the IRS in Washington collects the taxes in South Carolina, Congress in Washington makes most of the relevant laws and the Federal government is an overall big player. Plus, if you are poor and you depend on welfare, you would rather want to live in Athens, Greece than in Charleston. ---
**Author:** ![Hiker](https://avatars.discourse-cdn.com/v4/letter/h/3be4f8/32.png) [@Hiker](https://boards.straightdope.com/u/Hiker)\ **Post date:** [July 10, 2015, 8:33am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/355 "2015-07-10T08:33:18Z")
Greece has submitted [a new proposal](http://www.theguardian.com/world/2015/jul/10/greeces-proposals-to-help-end-talks-deadlock) as requested by the EZ. From what I can read in the press that proposal represents a sizeable step towards the demands of the EZ. It does not meet all of them, but it is getting close. Most commenters seem unsure whether it will be enough to make the european finance ministers agree to the 53,5 billion bailout package that Athens is asking in return - but for the first time there seems to be a chance that they might. Movement also on the other side: Yesterday the German press reported that finance minister Wolfgang Schäuble for the first time has indicated that he might no longer be entirely opposed to some form of debt restructuring. That used to be a very red line so far. After taking large strides towards grexit for weeks it looks like we are seeing a small step in the opposite direction there. It remains to be seen whether that is really a turnaround or just a brief respite. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [July 10, 2015, 10:11am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/356 "2015-07-10T10:11:08Z")
Well it seems like the UK should thank their good luck that they had [Margaret Thatcher](http://static.businessinsider.com/image/5162d9986bb3f7342f000018/image.jpg) to set them straight, and that the neo-liberal Milton Friedman was correct all along ([Greece debt crisis: Milton Friedman’s 1997 prediction of the eurozone disaster](http://www.afr.com/opinion/greece-debt-crisis-milton-friedmans-1997-prediction-of-the-eurozone-disaster-20150707-gi5tgk)) ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 10, 2015, 4:20pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/357 "2015-07-10T16:20:03Z")
The Greek PM is apparently going to try to [sell the Greeks on austerity](http://www.foxnews.com/world/2015/07/10/greece-prime-minister-to-sell-austerity-deal-to-reluctant-party/?intcmp=latestnews)again. And this time, they mean it. Regards, Shodan ---
**Author:** ![JoseB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/joseb/32/1530_2.png) [@JoseB](https://boards.straightdope.com/u/JoseB)\ **Post date:** [July 10, 2015, 5:15pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/358 "2015-07-10T17:15:50Z")
Copy-paste from the BBC website: \*\*\*"Greek MPs are to debate new proposals sent to the country’s creditors with the aim of getting a third bailout and averting a possible exit from the euro. The plans contain controversial elements, including pension reforms and tax rises, that were rejected at a referendum called by PM Alexis Tsipras."\*\*\* Soooooooooooooo… Greece has presented a proposal to the “troika” that basically incorporates many of the points that were explicitly rejected in the referendum. Simply beautiful. “Fuck the Germans”, indeed. Greece is ready to fuck Germany big time, more or less like this: “Yes, Germany, sir! I am ready, and I have already applied the KY-jelly to my asshole! Pound away!” Not that I am really surprised by this turn of events… 😛 Of course, it still remains to be seen whether parliament will acquiesce to the proposal… But they must know that their banking system is running on fumes and that without a serious cash injection it will be history. And if the price for that injection is to agree to formally present that proposal… ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 10, 2015, 7:41pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/359 "2015-07-10T19:41:38Z")
Yeah, that looks like it concedes a lot. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [July 10, 2015, 7:47pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/360 "2015-07-10T19:47:16Z")
> [@foolsguinea](#): > > Yeah, that looks like it concedes a lot. I think they ran the numbers and figured out that they had no choice. Based on the fact that they took so long to come up with their counter proposal I don’t think this is what they were originally going for (assuming they even knew what they were going for), but decided that this was as far as they could push things, and that they already have one foot off the cliff and the other is slipping. Still might not be enough. France seems to be taking it seriously and on board, but Germany is still not committing to this yet. So, it LOOKS like they are conceding a lot, but it still might not be enough at this point as far as they have pushed this and the response the German people and politicians are having to this circus. Guess we’ll know on Sunday. For the Greeks sake hopefully they are conceding enough. From what I’ve read they have liquidity, such as it is, until Monday night. After that? :eek: [Previous page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=17) [Next page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=19)