# 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:** 22
**Author:** ![Fuzzy\_wuzzy](https://avatars.discourse-cdn.com/v4/letter/f/a8b319/32.png) [@Fuzzy\_wuzzy](https://boards.straightdope.com/u/Fuzzy_wuzzy)\ **Post date:** [July 13, 2015, 9:15am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/421 "2015-07-13T09:15:42Z")
> [@AK84](#): > > Will this “deal” basically kick the ball to 2018-2020 when most of the principals will be out of office? Thats what it seems to me. Perhaps. It largely depends upon the political and economic situation in Greece during the coming years. I can easily see a situation in Greece where resentment builds. If the Greek electorate view a Left wing populist party has having “failed” them then it’s not so big a leap to imagine voters fleeing to a right wing populist party instead. ---
**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 13, 2015, 9:23am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/422 "2015-07-13T09:23:08Z")
> [@camille](#): > > Over 15 hours, and they’re still going! > > This reminds me of the infamous “Greek Goodbye”. When I was a child, whenever my Greek relatives would visit us, my cousins and I would end up falling asleep while the adults kept going. When I would wake up in the morning, they were all still there! > > Some FM’s left the meeting to sleep, and woke up to find them still going. Maybe that’s Tsipras’s last weapon. Word is the Germans won’t budge on the 50bn privatization assets. Will lack of sleep wear them down? Couldn’t the German negotiators just walk out and say, “We need sleep; see you again tomorrow at 11 AM?” ---
**Author:** ![Hiker](https://avatars.discourse-cdn.com/v4/letter/h/3be4f8/32.png) [@Hiker](https://boards.straightdope.com/u/Hiker)\ **Post date:** [July 13, 2015, 9:30am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/423 "2015-07-13T09:30:43Z")
> [@AK84](#): > > Will this “deal” basically kick the ball to 2018-2020 when most of the principals will be out of office? Thats what it seems to me. That depends on what you expect. Will Greece in 2020 be a country with a highly efficient administration, a healthy trade surplus and a corruption index at the level of Denmark? Probably not. The problem is that a lot of people seem to think that that is exactly what must be achieved or else the bailout has failed. The result will be more griping, finger pointing and self-satisfied “told you so” from everyone’s experts and their mother. In reality nothing will get better _fast_. Under no possible scenario was that going to happen. So in a way “kicking the ball” was always the best that anyone could do. In the short run it was important to make sure that at least that ball does not roll off the cliff. Mid-term slow improvements towards a healthier economy should become visible. Many of the steps decided now (broadening the taxt base, establishing a more sustainable pension system) seem to make sense in that respect. But this will take time to take effect. The greatest danger at this point will be people looking at the Greek economy one year from now, observing “Unemployment is still high. The changes aren’t working. Let’s abandon them.” ---
**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 13, 2015, 12:06pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/424 "2015-07-13T12:06:38Z")
> [@Donnerwetter](#): > > I have no idea how Schäuble can keep going. He is 72 years old and he sits in a wheelchair (he is paralyzed from the waist down). I hear a company he presumably has substantial stock in (he is chairman of its board) stands to make a lot of money from privatization deals. For those tens of millions to him personally, and hundreds of millions to his partners and employees, he could stay up for days. ---
**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 13, 2015, 12:14pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/425 "2015-07-13T12:14:57Z")
> [@Fuzzy\_wuzzy](#): > > Perhaps. It largely depends upon the political and economic situation in Greece during the coming years. I can easily see a situation in Greece where resentment builds. If the Greek electorate view a Left wing populist party has having “failed” them then it’s not so big a leap to imagine voters fleeing to a right wing populist party instead. Oh, yeah. So far, it looks like Tsipras was desperate enough to sell out Greece’s economic health pretty hard, and he now has to worry about an even deeper depression leading to a complete discrediting of him, the present Coalition of the Radical Left, and probably Leftism in Greece and in Europe. Smart money says the next Greek government is Golden Dawn. I mean, it could be some kind of resurgence of a wing of PASOK, but really, New Democracy and PASOK got them into this mess, SYRIZA failed to get them out and even dug in deeper in desperation… Yep, Greek Nazis win the next election. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [July 13, 2015, 12:15pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/426 "2015-07-13T12:15:57Z")
Sounds to me like the Germans are refusing to take a haircut on the debt. I’m inclined to think the Greek parliment will vote No, and begin preparations to leave the Euro. Also, Tsipras’ tenure as Prime Minister will be over within days. Perhaps hours. ---
**Author:** ![Hiker](https://avatars.discourse-cdn.com/v4/letter/h/3be4f8/32.png) [@Hiker](https://boards.straightdope.com/u/Hiker)\ **Post date:** [July 13, 2015, 12:22pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/427 "2015-07-13T12:22:03Z")
> [@foolsguinea](#): > > I hear a company he presumably has substantial stock in (he is chairman of its board) stands to make a lot of money from privatization deals. For those tens of millions to him personally, and hundreds of millions to his partners and employees, he could stay up for days. Well, yeah - it was always clear that the man must have some sinister motive. A quick lookup in [Wikipedia](https://en.wikipedia.org/wiki/Wolfgang_Sch%C3%A4uble#Other_activities_.28selection.29)shows that Schäuble is indeed chairman somewhere: The “Friends of the Festspielhaus Baden-Baden”. I have not been able to figure out how many hundreds of millions the Festspielhaus will squeeze out of poor Greece. ---
**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 13, 2015, 12:27pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/428 "2015-07-13T12:27:33Z")
I’m not going to have time to look at this but I presume Tispras’s assumption is the Greek Parliament will reject this deal based on the referendum - thus the people make the ultimate decision not him. Some are saying it’s effectively a coup, but I can’t see it’s on the scale of Goldman Sachs’ takeover of US policy in 2007-08. ---
**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 13, 2015, 12:37pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/429 "2015-07-13T12:37:13Z")
> [@foolsguinea](#): > > I hear a company he presumably has substantial stock in (he is chairman of its board) stands to make a lot of money from privatization deals. For those tens of millions to him personally, and hundreds of millions to his partners and employees, he could stay up for days. OK, I misunderstood what I read. Here’s the link: > **[The Press Project - Ειδήσεις, Αναλύσεις, Ραδιόφωνο, Τηλεόραση](https://thepressproject.gr/)** > > The Press Project - Ανεξάρτητη Δημοσιογραφία | Ειδήσεις, Αναλύσεις, Ρεπορτάζ Ραδιόφωνο, Τηλεόραση, Περιοδικό ΖΗΝ, Ανασκόπηση > [@](#): > > “Valuable Greek assets of [EUR 50 bn] shall be transferred to an existing external and independent fund like the Institution for Growth in Luxembourg, to be privatized and decrease debt.” > > The Institution for Growth counts German Finance Minister Wolfgang Schäuble on its board, as anyone can see here . Its chairmanship alternates between the German Minister of Finance and the Minister for Economic Affairs. > > Discussion of this matter began back in 2014 (see here ), with no mention of a funds transfer. Just what is this bank? It was created to manage Marshall Plan resources for reconstructing the German economy, and it is involved in more than 1600 projects in developed economies abroad. This is a German national bank worth half a trillion – in other words, about twice as much as the World Bank. In 2011 it loaned 70 billion, drawing from international markets with low interest rates thanks to its AAA rating. Leon Macioszek has explained that the government invests 1.5 billion in the fund and yields 3-4 billion. > > In Greece the Institution for Growth is already involved in funding the lignite plant in Ptolemaida, which has been the object of environmental concerns . > > But the most important piece of information is that the fund gave 300 million euros to Lehman Brothers the same day that the firm went bankrupt. Bild, which we all know and love, wrote at that time that “it is the most idiotic German bank.” But not everyone was convinced this was mistaken. > > We’re sure that our own money is in good and trustworthy hands. It’s a government-affiliated bank, then. ---
**Author:** ![Hiker](https://avatars.discourse-cdn.com/v4/letter/h/3be4f8/32.png) [@Hiker](https://boards.straightdope.com/u/Hiker)\ **Post date:** [July 13, 2015, 12:55pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/430 "2015-07-13T12:55:29Z")
> [@foolsguinea](#): > > OK, I misunderstood what I read. Here’s the link: > > [The Press Project - Ειδήσεις, Αναλύσεις, Ραδιόφωνο, Τηλεόραση](http://www.thepressproject.gr/details_en.php?aid=79155) > It’s a government-affiliated bank, then. Yes, that’s closer to the mark. Also Wolfgang Schäuble is not on the Board of Managers of the KfW (that would be a man named Ulrich Schröder) but on the Supervisory Board, representing the Federal Republic of Germany which owns 80% of the KfW. From all of this I find it a little hard to see how he is going to personally make “tens of millions” of Euros from any privatization deals. ---
**Author:** ![Donnerwetter](https://avatars.discourse-cdn.com/v4/letter/d/b2d939/32.png) [@Donnerwetter](https://boards.straightdope.com/u/Donnerwetter)\ **Post date:** [July 13, 2015, 1:08pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/431 "2015-07-13T13:08:53Z")
> [@foolsguinea](#): > > OK, I misunderstood what I read. Here’s the link: > > [http://www.thepressproject.gr/details\_en.php?aid=79155](http://www.thepressproject.gr/details_en.php?aid=79155) > It’s a government-affiliated bank, then. You are not alone. A UK journalist who describes herself as a contributor to Forbes and the Financial Times also spread the rumor last night on Twitter that Schäuble were to gain personally from this Greece deal. Wolfgang Schäuble, in his capacity as German Finance Minister, is the [Chairman of the Board of Supervisory Directors of the Kreditanstalt für Wiederaufbau (KfW)](https://www.kfw.de/KfW-Group/About-KfW/Vorstand-und-Gremien/Verwaltungsrat-und-seine-Aussch%C3%BCsse/) which is a government-owned development bank. ---
**Author:** ![CarnalK](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnalk/32/486_2.png) [@CarnalK](https://boards.straightdope.com/u/CarnalK)\ **Post date:** [July 13, 2015, 1:24pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/432 "2015-07-13T13:24:44Z")
People must have a pretty damn poor impression of German democracy if they think a sitting finance minister can hold a profiting position with a bank. ---
**Author:** ![Mops](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mops/32/16494_2.png) [@Mops](https://boards.straightdope.com/u/Mops)\ **Post date:** [July 13, 2015, 1:25pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/433 "2015-07-13T13:25:12Z")
The Greek site also seems to be mistaking **KfW** for the the **Institution for Growth in Greece**. **KfW** (_Kreditanstalt für Wiederaufbau_) is a state-owned bank in Frankfurt (Main) established in 1948 to aid West German reconstruction. It has been quite successful there; among other things it still administers the portion of the Marshal Plan funds that the US waived repayment of, as a revolving credit fund. Also it administers loan programs for policy goals of the German government, e.g. for housing construction, energy savings in homes, renewable energy, cheap student loans etc. - policy goals that the German government supports by subsidised loans, to leverage private capital, rather than cash subsidies, so the infrastructure of a bank is needed. The supervisory board members are ex officio representatives of the German federal and state governments and other economy stakeholders such as unions and employers’ associations. The **Institution for Growth in Greece** , on the other hand, is a joint venture of the German government (via KfW) and the Greek government, established in 2014 with initially € 100 million by each side, to supply capital to economic development in Greece ([2014 press release](https://www.kfw.de/KfW-Group/Newsroom/Aktuelles/Pressemitteilungen/Pressemitteilungen-Details_203840.html)) ---
**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 13, 2015, 1:38pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/434 "2015-07-13T13:38:14Z")
Right. What I read was a distortion floating around social media. When I tracked down the actual link, I saw it was not as it was being presented. I don’t know anything about German conflict of interest laws, or whatever the equivalent concept is there. ---
**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 13, 2015, 1:46pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/435 "2015-07-13T13:46:43Z")
Don’t worry. I’d say almost everyone in this thread has been duped by capitalist propaganda, often repeatedly. ---
**Author:** ![Isosleepy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/isosleepy/32/479_2.png) [@Isosleepy](https://boards.straightdope.com/u/Isosleepy)\ **Post date:** [July 13, 2015, 2:18pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/436 "2015-07-13T14:18:32Z")
What might happen next is that this clears the Greek parliament, but not the Finnish and possibly not the German one, with failure in Benelux and former east-block parliaments also possible. If it’s just the Finns and one or more other smaller countries, the deal can likely be restructured as a collection of bilateral deals. The biggest problem is that the situation really requires a follow up with a Marshall-plan like aid package from “richer” European countries to Greece to have any prayer of Greece emerging from the coming certain recession and likely depression in anything less than a decade. In the current climate, any such aid will not pass most of Europe’s parliaments, even if Greece hits reform targets. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [July 13, 2015, 2:32pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/437 "2015-07-13T14:32:44Z")
> [@up\_the\_junction](#): > > Forget the wind and piss, how big is the debt write off? AFAIU, there is no debt write off. But I just logged on and glanced at the terms - maybe there is and I missed it somehow? The last 6 hours of negotiations, apparently, were all about IMF participation and reducing the collateral fund. In the end, the IMF is participating and the collateral fund is at 50B Euro - exactly as Germans demanded. So what was Tsipras mucking about for 6 hours then? ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [July 13, 2015, 2:40pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/438 "2015-07-13T14:40:16Z")
Varoufakis, talking about the deal: “The troika have made sure that they will make him [Tsipras] eat every single word that he uttered in criticism of the troika over the last five years. Not just these six months we’ve been in government, but in the years prior to that.” Well, yeah. When you come hat in hand to beg for money, you should make sure you leave your dignity at home. Even leftists are not immune to economic realities. ---
**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 13, 2015, 3:11pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/439 "2015-07-13T15:11:57Z")
It’s being nicely set up for an emotional Parliamentary response, that’s for sure. I’d burn in hell before accepting this, which I guess is the idea … ---
**Author:** ![Donnerwetter](https://avatars.discourse-cdn.com/v4/letter/d/b2d939/32.png) [@Donnerwetter](https://boards.straightdope.com/u/Donnerwetter)\ **Post date:** [July 13, 2015, 3:23pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/440 "2015-07-13T15:23:48Z")
If I were a Greek MP, I wouldn’t accept this either. [Previous page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=21) [Next page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=23)