# If Greece votes no to EU bailout what will happen? **URL:** \ **Category:** Great Debates\ **Created:** [November 1, 2011, 10:35am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473 "2011-11-01T10:35:31Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [November 2, 2011, 7:16pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/61 "2011-11-02T19:16:06Z")
> [@MOIDALIZE](#): > > Oh, so profligate Greeks, is it? > > [Guess again.](http://www.nakedcapitalism.com/2011/10/marshall-auerback-and-rob-parenteau-the-myth-of-greek-profligacy-the-faith-based-economics-of-the-%E2%80%98troika%E2%80%99.html) Oooh. A blog. By people who don’t know how to spell “Samson”. Seriously - their argument is that Greece is not profligate because the average income in Greece is less than other countries’? How is that relevant? If your income based on all relevant data should be $10K but you’re spending $20K, when you’re accused of profligacy how is it relevant to you say “but look at that guy over there, he spends $30K!” Well maybe he can afford to spend $30K. But you can’t afford even 20K. What again was the point? ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [November 2, 2011, 7:31pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/62 "2011-11-02T19:31:36Z")
> [@Terr](#): > > Oooh. A blog. By people who don’t know how to spell “Samson”. > > Seriously - their argument is that Greece is not profligate because the average income in Greece is less than other countries’? How is that relevant? If your income based on all relevant data should be $10K but you’re spending $20K, when you’re accused of profligacy how is it relevant to you say “but look at that guy over there, he spends $30K!” Well maybe he can afford to spend $30K. But you can’t afford even 20K. What again was the point? You must have skimmed over the relevant parts. Not only do Greek workers earn less per capita, but: > [@](#): > > On average, for 1998-2007 Greece spent only €3530.47 per capita on social protection benefits–slightly less than Spain’s spending and about €700 more than Portugal’s, which has one of the lowest levels in all of the Eurozone. By contrast, Germany and France spent more than double the Greek level, while the original Eurozone 12 level averaged €6251.78. Even Ireland, which has one of the most neoliberal economies in the euro area, spent more on social protection than the supposedly profligate Greeks. > [@](#): > > One would think that if the Greek welfare system was as generous and inefficient as it is usually described, then administrative costs would be higher than that of more disciplined governments such as the German and French. But this is obviously not the case, as Professors Dimitri Papadimitriou, Randy Wray and Yeva Nersisyan illustrate. Even spending on pensions, which is the main target of the neoliberals, is lower than in other European countries. > [@](#): > > Furthermore, if one looks at total social spending of select Eurozone countries as a per cent of GDP through 2005 (based on OECD statistics), Greece’s spending lagged behind that of all euro countries except for Ireland, and was below the OECD average. Note also that in spite of all the commentary on early retirement in Greece, its spending on old age programs was in line with the spending in Germany and France. > [@](#): > > In fact, Greece has one of the most unequal distributions of income in Europe, and a very high level of poverty, as the following table shows (source: OECD and Papadimitriou, Wray and Nersisyan). The evidence is not consistent with the picture presented in the media of an overly generous welfare state This all points not to a coddled welfare state, but a highly unequal society where the elites evade their taxes. Either start making competent, well-thought arguments, or quit cluttering the thread with your posts. You haven’t even been here 2 months and you already have 20% of the posts I have. ---
**Author:** ![Acid\_Lamp](https://avatars.discourse-cdn.com/v4/letter/a/d6d6ee/32.png) [@Acid\_Lamp](https://boards.straightdope.com/u/Acid_Lamp)\ **Post date:** [November 2, 2011, 7:38pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/63 "2011-11-02T19:38:01Z")
> [@Terr](#): > > Yes. MUCH higher. TANSTAAFL. > > Comparing Iceland to Greece is ridiculous too. Icelandic (Icelandish?) hairdressers were not retiring at 50 with full pension. Icelandic. It doesn’t matter anyway. When you boil this down, all it amounts to is “Who’s gonna make me pay?” It’s not as if those bankers can just go an repo all the Greeks television sets and sell them at an international pawnshop. The UN certainly isn’t going to tolerate a army of bank-funded mercenary.. er excuse me.._military contractors_ occupying Greece and forcing it’s people into slave labor or some such. The US us unlikely to tolerate a communist country like China making serious inroads in Greece either. Nobody is going to start a war that will ruin the ability of the country to function. The Greeks will have to get their shit together, but the only ones who will lose out are big banks, and I’m not at all certain that is a\* totally \*bad thing any longer. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [November 2, 2011, 7:59pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/64 "2011-11-02T19:59:51Z")
In talking to my American-Greek friends, I have been told that Greece’s problems actually started well before the euro advent. Before Greece joined the EC, it had its own tariffs, which were quite high-this allowed the Greek economy to sustain small factories, which made everything from shoes to electrical goods. When they joined the EC, they had to give up those preferential tariffs, which meant that: -Greece was flooded with cheap imports from Asia -the small Greek firms closed down and put lots of people out of work Now Greece has the worst of both worlds-high public debt and a dying manufacturing sector. So leaving the EC and abandoning the euro might not be such a bad thing. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [November 2, 2011, 8:54pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/65 "2011-11-02T20:54:28Z")
> [@MOIDALIZE](#): > > You must have skimmed over the relevant parts. Not only do Greek workers earn less per capita, but: It all amounts to Greece being a poorer country than others. They earn less, their pensions are less, and the social services are less. But that still does not diminish the profligacy of spending WAY more than what you can spend. > [@](#): > > This all points not to a coddled welfare state, but a highly unequal society where the elites evade their taxes. Everyone evaded taxes. Don’t point just at the “elites”. ---
**Author:** ![Naxos](https://avatars.discourse-cdn.com/v4/letter/n/50afbb/32.png) [@Naxos](https://boards.straightdope.com/u/Naxos)\ **Post date:** [November 3, 2011, 3:09am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/66 "2011-11-03T03:09:53Z")
> [@Oliveritaly](#): > > Reading here among other people: > [http://www.irishtimes.com/newspaper/breaking/2011/1101/breaking5.html?via=mr](http://www.irishtimes.com/newspaper/breaking/2011/1101/breaking5.html?via=mr) > > It seems as if the people of Greece might vote no on the EU bailout package. It’s very likely. What will happen? Answer No 1: Whatever will be, will be. Answer No 2: The economies of the modern so called “developed” countries are relying too much on speculation and straight out gambling in the past 50++ years. You’re asking people to place their bets in what would be the outcome of a “No” vote in Greece. Answer No 3: Unfortunately, Greece doesn’t have the natural resources of a country like Agentina, to be able to come out of a national bankruptcy in a similarly amazing way Argentina did. There would still be some speculative financial interest around to try and exploit the remaining country’s resources after a “No”, but it’s almost certain that the immediate results of a “No” will be financially devastating for the country. But… who knows. ---
**Author:** ![ruadh](https://avatars.discourse-cdn.com/v4/letter/r/d2c977/32.png) [@ruadh](https://boards.straightdope.com/u/ruadh)\ **Post date:** [November 3, 2011, 6:52am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/67 "2011-11-03T06:52:07Z")
> [@Terr](#): > > Everyone evaded taxes. Don’t point just at the “elites”. Companies and self-employed persons were the main culprits. It’s much easier to evade taxes when you’re responsible for declaring your own income, much harder when income taxes come out of your pay before you even receive it. ---
**Author:** ![2sense](https://avatars.discourse-cdn.com/v4/letter/2/e47774/32.png) [@2sense](https://boards.straightdope.com/u/2sense)\ **Post date:** [November 3, 2011, 8:12am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/68 "2011-11-03T08:12:54Z")
> [@MOIDALIZE](#): > > Iceland defaulted, yet they’re able to raise money in the international bond market at rates cheaper than Ireland and Greece. It’s silly to talk about how nations should have to “tighten their belts” like individuals do when nations can print their own money (and no, that does not automatically cause hyperinflation). This. Clearly Greece can default and/or go off the Euro and float their currency to ease the fiscal shock to their society. Why wouldn’t they? Obviously French and German bankers and policy makers don’t want this to happen but they don’t seem willing to offer Greece real concessions (floating the Euro some to share the pain around). Instead they put together this showpiece deal hoping the Greeks won’t notice that it will still leave them in the toilet for the next 2 decades. Whether these Greeks or those Greeks or all Greeks are at fault for letting things get out of hand is beside the point. A shitty deal is a shitty deal. They’d be fools to take it. ---
**Author:** ![jjimm](https://avatars.discourse-cdn.com/v4/letter/j/ba8739/32.png) [@jjimm](https://boards.straightdope.com/u/jjimm)\ **Post date:** [November 3, 2011, 9:09am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/69 "2011-11-03T09:09:42Z")
Merkel and Sarkozy have just summed it up: Yes, stay in the euro and get bailed. No, you’re out of the euro and on your own buster. If Papandreou survives the next two weeks, which is looking increasingly unlikely given the public rebellion of key members of his cabinet, it seems almost certain that the vote will be “no”. So… what are the implications for the euro if Greece leaves? Would the currency rebound or would this lead to the expulsion of other countries? ---
**Author:** ![Capt.Ridley\_s\_Shooting\_Party](https://avatars.discourse-cdn.com/v4/letter/c/cc9497/32.png) [@Capt.Ridley\_s\_Shooting\_Party](https://boards.straightdope.com/u/Capt.Ridley_s_Shooting_Party)\ **Post date:** [November 3, 2011, 9:21am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/70 "2011-11-03T09:21:35Z")
> [@ruadh](#): > > Companies and self-employed persons were the main culprits. It’s much easier to evade taxes when you’re responsible for declaring your own income, much harder when income taxes come out of your pay before you even receive it. Well, that’s just tax evasion. There’s also the fact that [pensions were being paid out to thousands of dead pensioners](http://www.reuters.com/article/2011/08/12/us-greece-pensioners-idUSTRE77B4BV20110812) — and that’s just the ones that they know about. It seems that every section of society is engaged in widespread fraud or tax evasion, of one form or the other, and the civil service is too incompetent of unwilling to root it out. ---
**Author:** ![jjimm](https://avatars.discourse-cdn.com/v4/letter/j/ba8739/32.png) [@jjimm](https://boards.straightdope.com/u/jjimm)\ **Post date:** [November 3, 2011, 9:32am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/71 "2011-11-03T09:32:44Z")
Anecdote time: the Greek landscape is littered with occupied but unfinished houses - there’s a half-built top storey on all of them. The official explanation is that it is to allow another storey to be built on when the family expands. However I have been told by several Greek people that it is actually to avoid local taxation, because it is a “roof tax” levied on finished buildings only. I’m prepared to be corrected. ---
**Author:** ![Capt.Ridley\_s\_Shooting\_Party](https://avatars.discourse-cdn.com/v4/letter/c/cc9497/32.png) [@Capt.Ridley\_s\_Shooting\_Party](https://boards.straightdope.com/u/Capt.Ridley_s_Shooting_Party)\ **Post date:** [November 3, 2011, 9:41am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/72 "2011-11-03T09:41:03Z")
I’ve also heard the same thing when I’ve been in Greece, and I’ve also seen the masses of unfinished houses all over the place. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [November 3, 2011, 10:57am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/73 "2011-11-03T10:57:04Z")
> [@jjimm](#): > > Anecdote time: the Greek landscape is littered with occupied but unfinished houses - there’s a half-built top storey on all of them. The official explanation is that it is to allow another storey to be built on when the family expands. However I have been told by several Greek people that it is actually to avoid local taxation, because it is a “roof tax” levied on finished buildings only. > > I’m prepared to be corrected. I was told the same. In the mid 90s. As for the question. A professor of economy on the telly said several American economists had estimated the effect of defaulting and leaving the Euro as an immediate GDP cut of about 40-50%, but also that nobody really knows; it could be worse. A halving of the GDP will of course be very bad, but there are actually Euro nations today that are about that much poorer than Greece and which are forced to help bail out Greece. It is clearly unfair that poorer nations are forced to send large sums to richer nations. Why should Estonian or Slovakian citizen bail out the much richer Greek citizens? Estonia already has implemented austerity measured much in excess of those Greek have done. ---
**Author:** ![2sense](https://avatars.discourse-cdn.com/v4/letter/2/e47774/32.png) [@2sense](https://boards.straightdope.com/u/2sense)\ **Post date:** [November 3, 2011, 1:48pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/74 "2011-11-03T13:48:38Z")
Why would changing currencies cost Greece a huge chunk of GDP? Sounds like more scary “Take Your Medicine or Else!” talk to me. Assuming it’s not extremely volatile, having to exchange currencies isn’t a huge burden on the person buying or selling in a foreign nation. And Non-Euro countries trading in Greece are already doing it. Things would be uncertain at first but I would expect their GDP to go up after Greece leaves the Euro (not necessarily immediately of course) since inflation will help get them out of the fiscal mess faster and with less burden on Greeks. Austerity doesn’t prime the pump. If I were Greek I’d be voting NO. Maybe the Suck It Up Crowd is right and things will be bad if they leave the Euro and/or default. But the Suck It Up Crowd isn’t offering a viable alternative. And the European central bankers have demonstrated their allegiance to German and French concerns. Sure Greece overspent but inflation would help Italy, Spain, and Portugal as well and those nations were more fiscally restrained. What sense does it make to let people who don’t give a fuck about you or your problems control your currency? The fiscal corruption in Greece is a seperate issue. They will have to get a handle on that or they won’t be able to prosper, period. The question is about what kind of economy they want to try to do that in. I’d prefer a dynamic and growing economy. And if that’s not what’s most profitable for French and German bankers, too bad. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [November 3, 2011, 2:07pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/75 "2011-11-03T14:07:57Z")
Greece has a deficit even before any debt servicing of 8-10%. If Greece defaults that deficit would have to be cleared away immediately. That’s 10% GDP reduction off the bat. The three largest Greek banks hold large amounts of Greek bonds and would go bankrupt with a Greek default. That’s another large lump. Economic turmoil would account for another large share. The inability for any private citizen or small or medium sized Greek company to gain credit for any investments would cost a great deal more. That’s all assuming the transition could be handled with some measure of control. Which is far from certain. ---
**Author:** ![Rune](https://avatars.discourse-cdn.com/v4/letter/r/e68b1a/32.png) [@Rune](https://boards.straightdope.com/u/Rune)\ **Post date:** [November 3, 2011, 2:23pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/76 "2011-11-03T14:23:33Z")
I don’t see any solutions coming from the protestors either. Many are merely anarchists. Greece cannot protest itself to living beyond its means. The budget will have to be balanced. This can be done gradually over a few years where the EU helps cushion the transition by giving some financial aid packages, or it can be done at once and with a bang. In many ways I agree that the latter is to be preferred and that Greece has no obligations towards foolish foreign lender-happy banks that made a joke of due diligence. But it’s going to make the current austerity measure have felt like a day on the beach. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [November 3, 2011, 4:35pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/77 "2011-11-03T16:35:23Z")
> [@Rune](#): > > Greece has a deficit even before any debt servicing of 8-10%. If Greece defaults that deficit would have to be cleared away immediately. That’s 10% GDP reduction off the bat. The three largest Greek banks hold large amounts of Greek bonds and would go bankrupt with a Greek default. That’s another large lump. Economic turmoil would account for another large share. The inability for any private citizen or small or medium sized Greek company to gain credit for any investments would cost a great deal more. That’s all assuming the transition could be handled with some measure of control. Which is far from certain. ^ this. For some reason a bunch of posters think that Greece can default and there will be a rush of lenders to give them more money. “Hey, they will have no debt, so they will be a good risk”. Good luck with that. ---
**Author:** ![Oliveritaly](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/oliveritaly/32/15233_2.png) [@Oliveritaly](https://boards.straightdope.com/u/Oliveritaly)\ **Post date:** [November 3, 2011, 5:43pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/78 "2011-11-03T17:43:52Z")
Looks like the Greek PM dropped the referendum proposal … Was that the last hurdle to accepting the bail out? ---
**Author:** ![lisiate](https://avatars.discourse-cdn.com/v4/letter/l/f05b48/32.png) [@lisiate](https://boards.straightdope.com/u/lisiate)\ **Post date:** [November 3, 2011, 8:27pm UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/79 "2011-11-03T20:27:24Z")
I’m not so sure he has, this [zerohedge post](http://www.zerohedge.com/news/all-fixed-greece-not-so-fast) says that there will be no referendum if and only if the opposition agree to the bailout plan. But the opposition party refuses to negotiate until Papandreau resigns as Prime Minister. So things are all up in the air still. I’m guessing we’ll see a collapse of the Papandreau government, with a coalition government being formed, adopting the EU bailout and then getting slaughtered in the next Greek election. And I’m extremely sceptical about the bailout’s chance of success anyway. (Success here being defined as the reduced payments being made on time and in full without Greece’s economy totally collapsing). ---
**Author:** ![2sense](https://avatars.discourse-cdn.com/v4/letter/2/e47774/32.png) [@2sense](https://boards.straightdope.com/u/2sense)\ **Post date:** [November 4, 2011, 4:09am UTC](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473/80 "2011-11-04T04:09:50Z")
> [@Rune](#): > > Greece has a deficit even before any debt servicing of 8-10%. If Greece defaults that deficit would have to be cleared away immediately. That’s 10% GDP reduction off the bat. The three largest Greek banks hold large amounts of Greek bonds and would go bankrupt with a Greek default. That’s another large lump. Economic turmoil would account for another large share. The inability for any private citizen or small or medium sized Greek company to gain credit for any investments would cost a great deal more. That’s all assuming the transition could be handled with some measure of control. Which is far from certain. Why is deficit spending impossible after default? Iceland is still borrowing money, Greece could too. Why would the Greek government want to let their biggest banks fail? They could take them over, clean out the investors, protect the depositors, and recapitalize them. Why would these people be unable to gain credit for any investments? They would have to lose a chunk to inflation like everyone else but they would still have their wealth. Some turmoil is to be expected. I’m not making this out to be a business as usual scenario. But if the alternatives are a “Lost Generation” or taking a chance on facing things head on, why not take the chance? The first choice is just giving up. [Previous page](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473.md?page=3) [Next page](https://boards.straightdope.com/t/if-greece-votes-no-to-eu-bailout-what-will-happen/601473.md?page=5)