# 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:** 25
**Author:** ![camille](https://avatars.discourse-cdn.com/v4/letter/c/22d042/32.png) [@camille](https://boards.straightdope.com/u/camille)\ **Post date:** [July 14, 2015, 11:21pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/481 "2015-07-14T23:21:50Z")
> [@XT](#): > > Yeah, dude, like the Europeans are going to listen to the US Treasury on any of this. 😛 I think you guys have it backwards. The Europeans will listen because they need an excuse to get Greece out. Technically, the IMF can’t loan the money if it’s not sustainable. According to Schaeuble, debt relief is off the table. So what is left? They want it to look like a Grexit, not a Greviction. That offer was never meant to be accepted. If Greece doesn’t walk away from it, they need another excuse to kill the deal, so the “secret/leaked” IMF report fits the bill. By the way, looks like the other PIIGs are falling into line: [Podemos Backtracks on Aim to Restructure Spanish Public Debt](http://www.bloomberg.com/news/articles/2015-07-14/podemos-backtracks-on-aim-to-restructure-spanish-public-debt) I guess they don’t want to be next. ---
**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 15, 2015, 12:16am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/482 "2015-07-15T00:16:56Z")
> [@Donnerwetter](#): > > If I were a Greek MP, I wouldn’t accept this either. It’s really hard to see how this is going to work. Asset sales haven’t even been working so far. VAT hikes may be contractionary (or widely dodged in a sort of economic self-defense). Rising surplus targets every year rely on constant tax hikes and probably \*also \*something like economic expansion, which doesn’t look likely. It’s possible that the point is to depress Greece so far that it can eventually be substantially bought up by foreign capital. It’s very possible that the actual fallout will be a surging Greek nationalism and a sort of “up yours” attitude toward northern Europe. ---
**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 15, 2015, 12:27am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/483 "2015-07-15T00:27:28Z")
> [@Terr](#): > > Greek MPs have the choice: > > (1) accept the agreement that is “humiliating” but does a lot of _good_ things for the economy at the expense of immediate financial pain to the citizens, and if implemented properly has a chance of bringing some prosperity to Greece. > > (2) reject the agreement, and bring _much worse_ immediate financial pain to the citizens, with same old continuing financial and economic policies and no prospects of any improvement. > > But (2) provides for “dignity”. Can’t eat dignity though. See, I disagree. 1. They can concede to the “frugality” their creditors demand; while sending money out of Greece both directly (in loan service) and indirectly (as private assets hide outside the country); and lose whatever hope of prosperity they have for a generation. All while being effectively dollarized to the euro. And they’ll be in severe depression another few years, and at least mild depression so long as they stay on the euro. 2. They can let the socialists in SYRIZA institute reforms on their own terms, and possibly do a better job than the creditors who gave them 25% unemployment and obviously would again. If they let themselves be kicked out of the eurozone, they can even have their own monetary policy. This has the additional advantages of a) forcing them to move away from borrowing foreign money for the year or so they have to raise all funds internally; and b) alienating them from Europe enough to stop letting foreigners manipulate their country. And all they have to do is go through a rough currency transition, maybe two years. Dignity in this case is a way out. ---
**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 15, 2015, 12:33am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/484 "2015-07-15T00:33:49Z")
> [@Rune](#): > > It’s silly because the exact reason Germany is rich and Greece is poor is that Germany doesn’t tend to collude those two as much as Greece. Funny, I thought it was your rich coal and iron seams, your thriving export in military anti-personnel weapons, and your moderately compact continental geography; versus Greece sort being a country of exiles from the rich agricultural lands now held by the Turks to a bunch of rocks in the sea. Or to put it more drily, you have very different trade balances for geographic reasons. ---
**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 15, 2015, 12:38am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/485 "2015-07-15T00:38:54Z")
> [@XT](#): > > Good thing you aren’t in charge then, as you’d merrily be taking Greece off a cliff cursing the Germans the whole way down to the bottom. Honestly? He’d probably be right to do so. Sometimes you gotta jump out of a smoke-filled house and break your leg, rather than asphyxiate. Greece doesn’t want Grexit, but without it, things aren’t going to improve. That’s the sad reality. There is no path to prosperity through austerity. Greece is going to hurt either way, but they need to be free to chart their own monetary course. Grexit is bitter medicine, and they’re fighting it, but it’s going to make them stronger. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [July 15, 2015, 4:04am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/486 "2015-07-15T04:04:17Z")
Ok, so - IMF was supposed to kick in quite a bit of that $100B or so that Greece is getting out of the deal. Is IMF reneging? ---
**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 15, 2015, 5:43am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/487 "2015-07-15T05:43:20Z")
> [@Terr](#): > > Ok, so - IMF was supposed to kick in quite a bit of that $100B or so that Greece is getting out of the deal. Is IMF reneging? Did the IMF sign off on that part of the deal? I doubt it because it’s part of their basic rules to not loan money that creates unsustainable debt. Exactly the point people are making when they say this deal is a fraud. So no, don’t think they’re reneging. ---
**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 15, 2015, 5:59am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/488 "2015-07-15T05:59:17Z")
Here’s the thing, no matter who you want to blame, at a certain point it doesn’t matter. Let me use a variation on the common narrative: Greece is a crackhead. He has bought shitloads of crack on credit. He’s just a horrible horrible person. So now what do we do? Shall we desperately watch every dime he makes and make sure his crack dealer gets his share? If he gets clean and gets a good job tomorrow he’ll still never be able to pay back his dealer. …So let’s get real and accept that the money is lost. Acting righteous in the face of reality is stupid … ---
**Author:** ![camille](https://avatars.discourse-cdn.com/v4/letter/c/22d042/32.png) [@camille](https://boards.straightdope.com/u/camille)\ **Post date:** [July 15, 2015, 6:08am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/489 "2015-07-15T06:08:50Z")
> [@CarnalK](#): > > Did the IMF sign off on that part of the deal? I doubt it because it’s part of their basic rules to not loan money that creates unsustainable debt. Exactly the point people are making when they say this deal is a fraud. So no, don’t think they’re reneging. The thing is, they agreed to it the first 2 times even though the loans were unsustainable then, too. Possibilities are: 1) This is influenced by the US to put pressure on EU, 2) EU is looking for a way out without being blamed directly, 2) Report was leaked in hope of influencing Greek Parliament vote to encourage a voluntary Grexit. The Eurozone had this info before the summit, and it was disregarded when they made the deal. And they were the ones insisting on IMF involvement; Tsipras didn’t want it, and fought against it to the end. I think the Greek Parliament will approve the deal, but they probably will have to negotiate new terms now. I imagine Schaeuble and the hardliners will once again push for a Grexit - an assisted Grexit - plus humanitarian aide. ---
**Author:** ![usedtobe](https://avatars.discourse-cdn.com/v4/letter/u/ec9cab/32.png) [@usedtobe](https://boards.straightdope.com/u/usedtobe)\ **Post date:** [July 15, 2015, 6:32am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/490 "2015-07-15T06:32:43Z")
As I understand it, there is no actual loan agreement - the first wave of require legislation is just a per-requisite for actual negotiation of loan amounts and conditions. Haven’t heard anything about the Greek Parliament - which is probably not a good sign, given the positions staked out Sunday and Monday. These deadlines are starting to form a long and pathetic blur as they go by. ---
**Author:** ![Hiker](https://avatars.discourse-cdn.com/v4/letter/h/3be4f8/32.png) [@Hiker](https://boards.straightdope.com/u/Hiker)\ **Post date:** [July 15, 2015, 7:14am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/491 "2015-07-15T07:14:49Z")
> [@foolsguinea](#): > > Funny, I thought it was your rich coal and iron seams, your thriving export in military anti-personnel weapons, and your moderately compact continental geography; versus Greece sort being a country of exiles from the rich agricultural lands now held by the Turks to a bunch of rocks in the sea. > > Or to put it more drily, you have very different trade balances for geographic reasons. That is what you thought? Germany’s economy is based on coal and iron mining and on weapons exports, and Greece is struggling because they lost their most valuable lands to the Turks? I’d be interested to learn where those thoughts come from. Care to reveal your sources? ---
**Author:** ![AK84](https://avatars.discourse-cdn.com/v4/letter/a/85e7bf/32.png) [@AK84](https://boards.straightdope.com/u/AK84)\ **Post date:** [July 15, 2015, 8:24am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/492 "2015-07-15T08:24:22Z")
Al JAzeera has an [excellent documentary](http://www.aljazeera.com/programmes/specialseries/2015/07/agora-democracy-market-150701120718536.html) on the human side of it ---
**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 15, 2015, 1:28pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/493 "2015-07-15T13:28:37Z")
> [@foolsguinea](#): > > Honestly? He’d probably be right to do so. Sometimes you gotta jump out of a smoke-filled house and break your leg, rather than asphyxiate. > > Greece doesn’t want Grexit, but without it, things aren’t going to improve. That’s the sad reality. There is no path to prosperity through austerity. Greece is going to hurt either way, but they need to be free to chart their own monetary course. Grexit is bitter medicine, and they’re fighting it, but it’s going to make them stronger. Let me ask you think…do you seriously think that the Greeks didn’t look closely at a Grexit and weigh the pros and cons of staying? Do you REALLY think the current government, after getting their referendum vote (by over 60%) would simply do an about face and swallow what has to be some humiliating shit if they could have viably gone another direction, no matter the short term pain? Pain that obviously their voters were expecting? It would have been an unmitigated disaster for Greece to have left the Euro in the current state of things. The Greeks left it until the last minute when they were out of money and out of options. They obviously had not been secretly creating an alternative economic and currency system in the shadows or even some sort of bridge IOU type system…probably because by the time they had gotten their vote they had painted themselves completely into a corner from which they have no alternatives. So, yes…honestly it would have been stupid to do what up\_the\_junction was proposing, especially since you can see in every one of his posts that he’s talking from pure emotion and hatred of the Germans, not from any rational perspective. This isn’t to say that the deal the Greeks did get is all that great (it sucks, frankly) but when you back yourself into a corner from which you have no alternatives but to accept a deal you are usually going to get a bad deal. ---
**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 15, 2015, 1:37pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/494 "2015-07-15T13:37:06Z")
> [@foolsguinea](#): > > Funny, I thought it was your rich coal and iron seams, your thriving export in military anti-personnel weapons, and your moderately compact continental geography; versus Greece sort being a country of exiles from the rich agricultural lands now held by the Turks to a bunch of rocks in the sea. > > Or to put it more drily, you have very different trade balances for geographic reasons. The reason German is ‘rich’ is that they are very fiscally responsible, their citizens and corporations are pretty meticulous in paying their taxes (i.e. the government actually collects most of the taxes that are on the books and their citizens and corporations pay what they are supposed to without a lot of fuss or bother), since WWII they have been a bit manic about inflation (with good reason) and they keep their social spending well within their means, and they make products that are perceived to be of premium quality (and thus are sold as premium products). German citizens haven’t seen a large increase in their standards of living in decades and they seem fine with it and with continuing to pay their taxes as they are supposed. Greece has never done most of those things and has a completely different outlook and culture. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [July 15, 2015, 1:45pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/495 "2015-07-15T13:45:46Z")
> [@camille](#): > > The thing is, they agreed to it the first 2 times even though the loans were unsustainable then, too. Except Greece’s economy has continued to contract under austerity. That means that Greece’s GDP has gone down since the last round of payments from IMF That means that the ratio of Debt to GDP has gone up since the last round of IMF payments; one estimate I saw was that it’s approaching 200% of Greek GDP. That means that IMF has re-examined the situation and is now concerned that the debt load cannot be paid back without the debtors taking a haircut, and therefore it may be outside their mandate to contribute this time. This is not a static situation. ---
**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 15, 2015, 4:03pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/496 "2015-07-15T16:03:15Z")
Greece has until this evening to vote on the projected deal. Seems Tsipras and many in his party are against the deal and are saying so, but at the same time urging others to vote for it. THIS is the kind of shit that has brought Greece to the edge wrt the other Europeans…you agree to a deal, then you go back and say you think it’s a bad deal, then urge others to vote for it anyway. :smack: > [@](#): > > Greece debt crisis: Tsipras facing eurozone deal revolt > > Greek MPs are debating tough economic measures they must approve by the end of the day in order for an €86bn eurozone bailout deal to go ahead. > > The new legislation includes tax rises and an increase in the retirement age. > > PM Alexis Tsipras has said he does not believe in the deal, but has urged MPs to agree to the measures. > > The vote is expected to pass with opposition help, despite a revolt from some hardliners in the ruling left-wing Syriza party. > [@](#): > > Hardliners in the ruling left-wing Syriza party are likely to vote against, and the junior coalition party has offered only limited support. > > Opponents of the deal took to the streets of Athens ahead of the vote, and unions and trade associations representing civil servants, municipal workers and pharmacy owners held strike action. > > More than half of the members of Syriza’s central committee have signed a statement condemning the bailout agreement, describing it as a coup against their nation by European leaders. > [@](#): > > Mr Tsipras has said he does not believe in the deal, though he agreed to it. Good grief…man up for the sake of the gods! If you don’t believe in the deal (which is a reasonable stance…it’s a bad deal for Greece, though it opens the way for the possibilities of modification down the road after a lot of pain), and your party doesn’t believe in it then reject the fucking thing, walk away and do what you think you can to fix it. Don’t fuck around (relying on OTHERS to stick their necks out and do the dirty work to get it passed and save Greece from freaking total collapse sometime this week)! ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [July 15, 2015, 5:21pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/497 "2015-07-15T17:21:20Z")
> [@XT](#): > > Greece has until this evening to vote on the projected deal. Seems Tsipras and many in his party are against the deal and are saying so, but at the same time urging others to vote for it. THIS is the kind of shit that has brought Greece to the edge wrt the other Europeans…you agree to a deal, then you go back and say you think it’s a bad deal, then urge others to vote for it anyway. :smack: Tsipras is a clown. All politicians are scoundrels, but he seems to be a of gutless, whining variety. The weird thing is that he has support within Greece among voters. I guess that tells you what the _rest_ of the politicians is like. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [July 15, 2015, 6:14pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/498 "2015-07-15T18:14:10Z")
> [@usedtobe](#): > > As I understand it, there is no actual loan agreement - the first wave of require legislation is just a per-requisite for actual negotiation of loan amounts and conditions. Huh? So, this is like one of those bullshit Israeli/Palestinian summits where they try to reach an agreement that they will reach an agreement sometime in the future? :rolleyes: ETA: That explains a lot about the situation, actually. ---
**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 15, 2015, 7:21pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/499 "2015-07-15T19:21:36Z")
> [@Diceman](#): > > Huh? So, this is like one of those bullshit Israeli/Palestinian summits where they try to reach an agreement that they will reach an agreement sometime in the future? :rolleyes: > > ETA: That explains a lot about the situation, actually. No, there is an agreement, however, both sides have to actually get it ratified (plus there is the IMF angle, where they might not abide by it in any case if they don’t think it’s sustainable or even feasible). IF both sides get the agreement ratified then Greece will get some emergency funds to provide liquidity to their banking system in the short term and, possibly, down the road they might re-negotiate things like write downs or extensions of the debt…AFTER the Greeks have been tortured a bit or, looked at from the other side have shown that they are trustworthy and abiding by the agreement and doing what they can. I’d say that IF both sides ratify this that a ‘hair cut’ and extension of some kind are pretty much inevitable at some point, but when and how that happens is hard to say…especially since it’s not clear if this is all going to fly in any case. This is pretty much Greece’s last chance before getting the boot and going into total melt down (unless the brilliant Greek government has been actually getting ready for all of this and has a sooper sekrit plan for putting in their new currency or IOUs or whatever in the next day or two before the Greek banks collapse). ---
**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 15, 2015, 10:21pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/500 "2015-07-15T22:21:32Z")
> [@Hiker](#): > > That is what you thought? Germany’s economy is based on coal and iron mining and on weapons exports, and Greece is struggling because they lost their most valuable lands to the Turks? > I’d be interested to learn where those thoughts come from. Care to reveal your sources? Well, that was a deliberately rude oversimplification, but relative export strength is about geography and trade, grasshopper, geography and trade. It may be nice to pretend that corrupt countries are poor and ethical countries are rich, but I don’t see any historical basis for the claim that such distinctions trump geographical advantage. If Greece controlled access to the Black Sea, they’d have something of enduring geographic value. (Granted, they’d also be a target.) As it stands, they’re a shipping country with one end of what should be their main shipping route cut off by enemies. They’re still going to be naturally richer than Slovakia, say. But it’s expensive being Greece, and they’re missing the keystone of the Aegean. Maybe Greece should throw everything it can into the military and take back Constantinople, honestly. I mean, numerically, I don’t think they can, but right now they just look like they’ve had their taproot cut off. [Previous page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=24) [Next page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=26)