# 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:** 5
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [July 2, 2015, 4:56pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/81 "2015-07-02T16:56:40Z")
From today’s Guardian: “IMF says Greece needs extra €50bn in funds and debt relief” > **[IMF says Greece needs extra €60bn in funds and debt relief](https://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euros)** > > International lender issues strong message to Europe by warning that Athens’ debts are unsustainable and it needs 20-year grace period on debt repayments > [@](#): > > The International Monetary Fund has electrified the referendum debate in Greece after it conceded that the crisis-ridden country needs €50bn (£35bn or $55bn) of extra funds over the next three years and large-scale debt relief to create “a breathing space” and stabilise the economy. > > With three days to go before a knife-edge referendum, the IMF revealed a deep split with Europe as it warned that Greece’s debts were “unsustainable”. > > Fund officials said they would not be prepared to put a proposal for a third Greek bailout package to the Washington-based organisation’s board unless it included both a commitment to economic reform and debt relief. > > According to the IMF, Greece should have a 20-year grace period before making any debt repayments and that final payments should not take place until 2055. Is Greece about to win their game of chicken? ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 2, 2015, 5:06pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/82 "2015-07-02T17:06:48Z")
Funny how cancelling half their debt and giving them more money didn’t create a breathing space for Greece previously, or spur them to economic reform. A 20 year grace period is not much different than a default. Regards, Shodan ---
**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 2, 2015, 5:11pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/83 "2015-07-02T17:11:36Z")
> [@davidm](#): > > From today’s Guardian: > “IMF says Greece needs extra €50bn in funds and debt relief” > [IMF says Greece needs extra €60bn in funds and debt relief | International Monetary Fund (IMF) | The Guardian](http://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euros) > Is Greece about to win their game of chicken? Looks to me as if they are offering a carrot prior to the vote to encourage the Greek people to vote ‘yes’ and stay in the EZ and on the Euro. This is a really long video produced by the [BBC](https://www.youtube.com/watch?v=P7ff0GpH7RI), but I’m finding it pretty interesting. The guy doing the video really thinks the Greeks would be better off going with the Drachma, but it’s interesting that most of the Greeks he’s interviewing don’t agree with him…and interesting WHY they don’t agree and think that Greece should stay on the Euro. ---
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [July 2, 2015, 5:13pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/84 "2015-07-02T17:13:55Z")
> [@Shodan](#): > > Funny how cancelling half their debt and giving them more money didn’t create a breathing space for Greece previously, or spur them to economic reform. > > A 20 year grace period is not much different than a default. > > Regards, > Shodan I’m not necessarily advocating it, but I suspect that something like this is going to be what happens. Europe won’t want Greece to exit the Euro but they also don’t want the precedent of allowing a member to default, so they’ll end up doing something like default that they can call “not a default”. ---
**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 2, 2015, 5:18pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/85 "2015-07-02T17:18:05Z")
> [@davidm](#): > > I’m not necessarily advocating it, but I suspect that something like this is going to be what happens. Europe won’t want Greece to exit the Euro but they also don’t want the precedent of allowing a member to default, so they’ll end up doing something like default that they can call “not a default”. Well, too late for the default part…it was official yesterday that Greece had indeed defaulted. The only way they could have prevented that was by agreeing to the provisions to get an emergency loan from the special ECB fund for that, and they screwed that up with their own governments refusal to accept the provisions and their rhetoric and, of course, the referendum vote that the government is still calling for a ‘no’ vote on. This seems to be a carrot to get the Greeks to consider that if they stay in the Euro that some provisions will be made to help them out through the short and medium term…it’s all still contingent on a ‘yes’ vote on the 5th though to even start talking again. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 2, 2015, 8:24pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/86 "2015-07-02T20:24:49Z")
> [@davidm](#): > > I’m not necessarily advocating it, but I suspect that something like this is going to be what happens. Europe won’t want Greece to exit the Euro but they also don’t want the precedent of allowing a member to default, so they’ll end up doing something like default that they can call “not a default”. You may well be correct, although as **XT** points out, technically it is too late and they have already defaulted. I wonder what terms the Greeks will get on the further money they want. Are they going to pretend they will pay that back, or say the EU will have to wait twenty years on that too? Will they even bother to pretend they are going to reform? At some point, it will be clear that this is the cost of keeping Portugal and Spain and Ireland in the EU, because none of those are going to accept any deal that isn’t at least as good as what Greece got. And sooner or later, Great Britain at least will say “fuck this noise” if the price of being in the EU is endless subsidies to the PIIGS in return for - what, exactly? It reminds me in some ways of the lead-up to WWI. Countries sticking together and doing really stupid and counterproductive things leading to disaster, because they signed treaties that were meant to avoid disaster by sticking together. I saw a cartoon from pre-WWI. All the nations of Europe are in a lifeboat, and there is a leak in it. And the nations in the front of the boat are saying, “That’s a bad leak! Good thing it isn’t in our end of the boat.” I don’t think WWIII will break out, but a Great Depression, at least in Greece and Portugal and Spain is possible. Regards, Shodan ---
**Author:** ![gazpacho](https://avatars.discourse-cdn.com/v4/letter/g/6f9a4e/32.png) [@gazpacho](https://boards.straightdope.com/u/gazpacho)\ **Post date:** [July 2, 2015, 8:32pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/87 "2015-07-02T20:32:25Z")
> [@Shodan](#): > > I don’t think WWIII will break out, but a Great Depression, at least in Greece and Portugal and Spain is possible. A Great Depression for Greece is well under way and has been going on for a few years. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 2, 2015, 8:46pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/88 "2015-07-02T20:46:28Z")
I am sure if we all work together, we can make that worse, and include other countries in it. Regards, Shodan ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [July 2, 2015, 8:50pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/89 "2015-07-02T20:50:33Z")
Can creditors seize greek assets in their countries? Say a Greek ship in a German port-could a sheriff board the ship and attach it? Why don’t the Greeks sell off some of their assets (resort islands, ancient temples, statues, etc.)? Otherwise, what prevents greece from getting deeper into debt? ---
**Author:** ![Gary\_Kumquat](https://avatars.discourse-cdn.com/v4/letter/g/4491bb/32.png) [@Gary\_Kumquat](https://boards.straightdope.com/u/Gary_Kumquat)\ **Post date:** [July 2, 2015, 8:52pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/90 "2015-07-02T20:52:30Z")
> [@Shodan](#): > > And sooner or later, Great Britain at least will say “fuck this noise” if the price of being in the EU is endless subsidies to the PIIGS in return for - what, exactly? You’re conflating the EU (which Britain is part of) with the Eurozone (which it isn’t). Greece’s debtors are: 60% Eurozone 10% IMF 6% ECB 3% Greek Banks 1% Foreign Banks 15% Other bonds 3% Other loans Britain’s main exposure is because the Eurozone block is one of it’s biggest trading partners, so if the Euro plummets following a greek exit exports from Britain will be adversely effected. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [July 2, 2015, 8:56pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/91 "2015-07-02T20:56:07Z")
> [@ralph124c](#): > > Can creditors seize greek assets in their countries? Say a Greek ship in a German port-could a sheriff board the ship and attach it? I doubt that the ship belongs to the Greek government. > [@](#): > > Why don’t the Greeks sell off some of their assets (resort islands, ancient temples, statues, etc.)? Even better - why don’t they sell their babies into slavery? ---
**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 2, 2015, 9:07pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/92 "2015-07-02T21:07:41Z")
[QUOTE=Terr] Even better - why don’t they sell their babies into slavery? [/QUOTE] [QUOTE=ralph124c] Why don’t the Greeks sell off some of their assets (resort islands, ancient temples, statues, etc.)? [/QUOTE] They actually have been doing this already. ---
**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 2, 2015, 9:20pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/93 "2015-07-02T21:20:44Z")
Finally! After bleeding the country dry for years, fragments of truth from the IMF. Fuck em anyway. ---
**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 2, 2015, 9:21pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/94 "2015-07-02T21:21:00Z")
A major industry is tourism, so I’m not sure selling off temples, statues and resorts is the most intelligent long term way to pay off debts. Plenty of less touristy assets to sell off I’m sure. Someone mentioned in another thread that they unbelievably lack a land registry, which a linked article noted was a stumbling block for selling off many government assets. ---
**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 2, 2015, 9:23pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/95 "2015-07-02T21:23:47Z")
> [@Shodan](#): > > A 20 year grace period is not much different than a default. > > Regards, > Shodan Call it anything but, owners of capital don’t want to concede a sovereign default in Europe. ---
**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 2, 2015, 10:06pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/96 "2015-07-02T22:06:58Z")
> [@CarnalK](#): > > A major industry is tourism, so I’m not sure selling off temples, statues and resorts is the most intelligent long term way to pay off debts. Plenty of less touristy assets to sell off I’m sure. Someone mentioned in another thread that they unbelievably lack a land registry, which a linked article noted was a stumbling block for selling off many government assets. They are selling off things like airports and shipyards, but the basic premise is the same. ---
**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 3, 2015, 12:02am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/97 "2015-07-03T00:02:56Z")
> [@XT](#): > > Do you have a cite for this? My understanding is that they are running a ‘surplus’ if you don’t count payments on debt interest, local government and social security fund budgets. What do you think a surplus is? Yes, they are still in debt. But they are not running an account deficit. ---
**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 3, 2015, 12:50am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/98 "2015-07-03T00:50:27Z")
> [@foolsguinea](#): > > What do you think a surplus is? Yes, they are still in debt. But they are not running an account deficit. So now that they are in default and not paying back creditors, Greece will have no trouble maintaining infrastructure and paying pensioners? ---
**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 3, 2015, 12:50am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/99 "2015-07-03T00:50:51Z")
> [@foolsguinea](#): > > What do you think a surplus is? Yes, they are still in debt. But they are not running an account deficit. Well, but they are, if we are counting [2015](http://www.tradingeconomics.com/greece/current-account). Certainly it looks like they did better in 2014 (it was up and down, but I think it averaged in the positive). I have no idea what it means, to be honest, one way or the other…I had to Google the term and it seems the US has the highest ‘account deficit’ in the world and has for years, so I’m unsure what this really means in real world terms. ---
**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 3, 2015, 12:57am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/100 "2015-07-03T00:57:53Z")
> [@XT](#): > > I guess at this point their only hope is if enough of them come to their senses and vote ‘yes’ (which will also have the beneficial effect of causing the current government to resign), at least that’s how it seems to me. Even if people think it would be a good idea for Greece to leave the Euro and go back to their own currency it doesn’t look like they have enough capital to bridge the gap…the Greek people are in a serious capital crunch already, with very stringent limits being places on their ability to withdraw their own money from their own accounts. I suspect the vote will go your way this Sunday. And Greece will continue to suffer from contractionary fiscal policy combined with contractionary monetary policy. I don’t see the austarians even pretending that this will end well. ## I say vote No. Capital controls are in place to stem massive capital flight. Float the currency and that problem goes away (to be replaced by other problems). I admit I’m not overly familiar with the Greek situation: I’m basically extrapolating from Argentina’s experience. I’m guessing that the capital crunch can be addressed with a loosening of monetary policy. Double digit inflation may very well play a role as well. It won’t be fun. But it will be better than continued depression level unemployment. Kevin Drum notes that Germany has won the propaganda war. Though frankly some of their piss-poor lending decisions in the 2000s are arguably worse than the bread , circuses and cartoonish bookkeeping sponsored by the Greek government during the time. But Germany’s errors are complex while Greece’s are the stuff of morality plays. > **[Greece vs. Germany: Behind a veil of morality vs. technocracy, the Germans...](https://www.motherjones.com/kevin-drum/2015/07/greece-vs-germany-behind-veil-technocracy-germans-are-winning-war-narrative/)** > >   > [@XT](#): > > Oh, I’m sure it’s part of a grand plan. 😛 So, he first qualitatively accepted (most) of the terms, then [took two firm steps back](http://money.cnn.com/2015/07/01/news/economy/greece-bailout-concessions/index.html) by calling for a no vote which would negate them. Genius! It’s all strategic. > [@](#): > > I’m sure this will work out well for the Greeks…fuck those Germans! Yee-haw! 😃 But neither economics nor reality is a morality play. This currency union was nuts from the get-go. _It is still nuts. The problems will go away and come back until they are fixed_. Germany can either fiscally integrate with Greece (ha!) or Greece can take back control of their monetary policy. Though admittedly, I have no idea what happens to all those Euro deposits in Greek banks when the Greek government announces that Wonkabars are now legal tender. [Previous page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=4) [Next page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=6)