Yes but if you’re line of work was specifically lending money then you’d be broke if you didn’t assign higher rates to higher risk.
Greece is in serious serious trouble and nobody knows how bad it is except they are already rationing money and businesses are starting to shut down. If short term lending is interrupted then everything from payroll to the transport of goods stops.
I’m not so sure about that. If the drachma depreciates substantially against the euro (and I assume it will) Europeans and Americans will have an opportunity to go to Greece for prices that are laughably cheap. If it happens, I for one, am planning on booking a flight. Greek exports will undercut prices of similar products all over Europe and America. Greek businesses will also undercut the prices of goods sold to other Greeks, compared to imported products. The Greek government will be able to deficit-spend. It’ll be able to mail checks to pensioners and employees. It’ll be able to fund infrastructure projects that’ll put Greeks back to work. All that means less Greek unemployment.
If - as I believe - the national wealth of a country is the productivity of its people, all those previously unemployed people doing all that work will increase the national wealth of Greece.
Now, obviously, that scenario depends on Greece’s self-sufficiency: if they can’t keep the lights on and the people fed in the interim, then of course they’ll be fucked.
And if there are particular problems in the Greek economy - corruption and tax evasion, for example - those problems will continue to hold Greece back, whether it’s in the EU or not.
I don’t know. My guess is based on the fact that Greece owes billions of euros to other countries in the EU. I suspect, if Greece leaves the EU, the ECB will freeze its accounts, in order to pay them over to Greece’s creditors. It’s just a guess, but it seems like a reasonable one to me.
I don’t know if I understand what you’re saying here. But I think that whatever euros are in Greece, or are under the control of the Greek government, will go to pay for whatever imports Greece needs most. To put it differently, I think Greece will seize whatever euros it can get its hands on, pay for them in drachmas, and then use them (the euros) to buy food or energy or whatever the country needs, but can’t produce itself.
I can’t answer all those questions, but I think that if Greece leaves the EU and the euro, it will ignore outside debts entirely, while it tries to keep the lights on. At some point, thereafter, Greece will reopen negotiations to repay its debts, but it will never repay them entirely. It will start with negotiations with the creditors who have the most power to hurt them, and go from there.
Greece can’t unilaterally convert its euro debts to drachmas. I mean, it could, but if it handed over a bunch of drachmas to, say France, France does not “have to” accept them as payment in full. If it wants to get “paid in full” credit from creditors, it will have to negotiate an amount that’s acceptable on both sides.
These are real people suffering. :dubious: What if you and most of your neighbors were thrown out of work and you couldn’t get to you meager savings. How many days of food do you have in your house? What if your power company didn’t have the capital to buy fuel? What little food you have spoils or cannot be cooked.
What if this person was your father? Do you realize that they closed the banks so anybody without an ATM card was completely cut off?
This is referendum is like asking someone who hates Brussels sprouts whether he wants to vote for it for dinner or not. It’s good for you, but will they be wise enough to say yes?
Spanish unemployment is over 20%
Germany has 6.8% unemployment - as close as you get to zero in modern societies. It has enjoyed around that level of unemployment throughout this crises because keeping Greece on life support feeds German exports.
The euro is basically an artificially depressed version of the DMark.
It’s a nonsense to treat Greece as an homogenised whole.
As always, the people paying the highest price are the working class, the retired and the vulnerable.
We know the game here, middle class Greeks have been taking $50 flights to London - and presumably other capitals - for 5 years now; open a UK account and put everything that’s not spending money into it. In euros, dollars and pounds.
No one - I mean no one except a few people media drag up to create the drama - is surprised by what’s happened to the banks.
If you have money, it left the Greek banking sector years ago. It’s the elderly, poor and vulnerable who rely on benefits who are suffering now.
My quote was outlining the scenario whereby the Greeks vote yes. That’s a recipe for austerity and Greek depression.
Or so I was claiming. Another scenario has occurred to me. The economist Paul De Grauwe argues that, “Greece is solvent but illiquid”, which is interesting if true. He claims that nominal Greek growth of 2% would be sufficient to exceed interest payments, which implies solvency. If that is the case I can see a path out. Greeks vote yes. Government falls. EU starts to play ball with mainstream Greeks. Austerity is eased up a little - basically Greece adopts the milder austerity of Latvia. That might be sufficient to secure shitty growth, enough to keep the creditors happy and unemployment declining at a slo-o-o-o-o-o-w rate. Maybe.
Greek media is pushes Yes vote-- hard. Moguls don’t like the Greek President. Greek Media Really, Really Wants Yes Vote On Euro-Bailout – Mother Jones
Again-no. Greece is too tiny to affect the value of the Euro. Add in the Spanish and Portuguese economies and the Rest of Europe still dominates. Just because Germany doesn’t give a shit doesn’t mean they are benefiting from Greek suffering.
Though in some ways they are. For rebalancing to occur, you would need higher inflation in Germany than in Spain. Shockingly high inflation -at least to a German: it could top 4%!!11!!! It would be Weinmar all over again!!!
Never underestimate the power of human folly.
So when will we get the result, in the US EST?
Sadly, the Greek Indie-gogo fund has only raised 1.8 million Euros, so no help there, I’m afraid. Still - 45 hours left.
Of course you don’t look at Greece in isolation - you look at the overall benefits of the southern countries on the competitive value of German exports. And it’s huge.
While most European economies shrank or stagnated post crash, Germany boomed.
What a beautiful position to be in; the value of the DMark depressed in the guise of ‘euro’, and poor nations paying you interest for the privilege.
Every day was Christmas in Berlin.
These poor nations got that way by getting addicted to other people’s money.
Tax evasion in Greece is something like twice what it is in Germany. Throw in an addiction to generous pensions funded with borrowed money instead of contributions from those receiving the largesse (with reforms never quite applying to the current crop of retirees). Whatcha got there is a recipe for killing productivity. And for creditors to stop being played for the sucker.
You would have to be an idiot to extend money to Greece, and frankly, if Greece gets to walk out on $400 Billion, I have trouble wondering why they wouldn’t. Then they can make their own austerity rule: If, as a society, we want to have money, we have to be productive. 
How does a family inflate their currency to de-value a debt?
Regards,
Shodan
If a society makes more money the poor and working class people don’t see it no matter how “productive” they are. All over the world, the game is rigged.
They don’t see it in good times (expensive accountants see to that), and they bear the burden of ‘socialised’ repayment in bad times - trademark: Goldman Sachs. They are used by the Greek ownership class, by the Germans, used by the EU, used by the IMF.
Everyone wants a little piece of the vulnerable. And until today, they were getting it.
“Society” doesn’t make money.
Individuals do.
And most societies have plenty of people happy to get Other People’s money. When society enables those folks to live more generously than their personal productivity, the borrowing begins. To the extent societies like Greece’s encourage comfortable pensions on other people’s money, along with easy tax evasion, they discourage individual productivity.
Eventually the Other People will stop extending their money.
Balkiness from Germans to lend more is not driven by a perception that Greeks are slaving away for the Man but just getting screwed.
It’s driven by a perception that German taxpayers are slaving away, and Greeks are happy to indefinitely borrow the results of that productivity so the Greeks do not have to be as productive themselves.
I’m not sure it’s good for them. If I were Greek, I’d take the risk of voting “no” (with the assumption that Greece would default on all her debts fommowing a no). I can’t see how they can extract themselves from this situation barring starting afresh, regardless how painful it might be at first. I can’t see how they can take more austeritywithout aggravating an already dire situation.
The BBC reports that they have, in fact, voted no. Based on 15% of the results tallied, 60% No, 40% Yes.
Stuff that up your rhur.
Fantastic - good for them!
They defaulted already (on Monday), so that’s a moot point right now. The vote was whether they would accept the ECB’s proposed terms for a (or I should say, yet another) bailout or not. The terms are pretty stiff, to be honest…read, more austerity. The Greek government seems to think (for reasons that escape me) that they will be in a stronger negotiating position if their referendum get’s a ‘no’ vote. Since it looks like that’s exactly what they got, I suppose we shall see. Personally, at this point I’ll be shocked if either is willing to negotiate in the face of this, and a Greek boot from the EZ (and probably the EU) seems inevitable, but, who knows…maybe fine political commentators such as this have it right:
[QUOTE=up_the_junction]
Stuff that up your rhur.
Fantastic - good for them!
[/QUOTE]
This is, as always, a very nuanced and verbose treatment of this complex subject without any undue bias or negativity. Thanks, as always for your fine contribution!
It is noteworthy that there is no legal process, there are no rules for either expelling a country from the eurozone or for a country to leave on its own account. Nobody thought of that.
You can keep saying this, but it won’t make it true.
Greece has been working on reform. They tried austerity on the terms of “Europe,” and got massive depression from it. The argument between SYRIZA and the troika is not about whether to reform, but who gets to run it, and what it’s going to look like.
They defaulted already in the sense that they didn’t pay their instalment in time. I meant defaulting completely : stating that they won’t pay back any of their existing debts.