Greece's Debt Crisis

[stui magpie]

[Dangles]

It's disappointing that the finance minister quit. He was cool. He rode a motorcycle and fronted up to international press conferences in t-shirts.

[Mugwump]

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Just on this, the Greeks have now had their referendum, and voted that they should not have to meet their debts. It's a bit like a family voting on whether they want to pay the mortgage. The Greek government has been celebrating the victory for democracy, which it is, in a way - until you notice that the bank manager, Germany, also has a Democracy, and my German friends and acquaintances seem disinclined to vote to pay the Greeks' mortgage for them. Welcome to Alice in Euroland.

I'm clutching my lucky Australian and British passports tightly, and thanking God I was fortunate enough to grow up in countries with relatively low flakiness.

[What'sinaname]

Greeks are so stupid.

Hope the �$%$ers run out of money and the military declare martial law.

Someone should invade them and conquer the dumb �$%$ers.

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[Jezza]

[Jezza]

[pietillidie]

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[Morrigu]

Am I missing something here

They haven't payed their way for years - much to do with their cash in hand society and corruption and sorry to offend but a general lack of work ethic and any desire or acceptance that they need to contribute financially to expected services such as health care, pensions etc - and are now bankrupt and in debt - having been bailed out by the EU and not repaying that substantial debt - and now expect what - we voted no so we expect you to waive our debt and life goes on?????

Tell em their dreaming.................

MUCH MUCH MUCH better places to go Jo

[pietillidie]

[HAL]

Do you use double coupons?

[Mugwump]

^ PTID, The post above reads like a Syriza press release. My analogy is certainly not complete, but it�s pretty apt. Let me repeat it - The Greek referendum is �a bit like� a family voting not to pay its debts. It�s as futile and meaningless as that, given the dependence on external funding to sustain the economy (aka the house). That�s why the banks are closed in Greece.

Regarding the debt crisis overall, your analogy seems more than a little ambiguous, but I think it�s that the Greek people are �a conglomerate refusing to save a failed venture, thereby forcing creditors to put forward a better solution.� If that�s what you meant, then the vote doesn�t �force� the creditors (ie EU taxpayers) to put forward anything at all. The referendum essentially dares the bank to foreclose and write down the debt. It is indeed �a bit like� a family voting not to pay the mortgage. The bank (ECB, IMF et al) will indeed take a hit. Perhaps the haircut will be bigger if it forecloses now, but it may also judge that it is better not to throw good money after bad on a serially delinquent debtor which does not seem to recognise its responsibility for its plight and prefers to blame others.

�There is nothing special to see here at all, except for the unique aspect of a monetary union�. That is like saying of Lehmann Brothers in 2008 �It�s a bank collapse - there is nothing special here at all except for the interconnectedness of the global financial system�. It�s true, it just ignores the salient point.

�A sustainable and rational outcome� is not really a matter the Greek people can decide, at this point. It is a matter for the other democracies of the EU. It may be naked debt relief (in addition to that already granted in the form of longer payment terms and ECB-underwritten cheap credit for Greece) ; or it may be foreclosure. The former will give encouragement to the likes of Podemos in Spain or Cinque Stelle in Italy who may consider themselves also entitled to Germany�s credit card. The latter will probably cause vast suffering in Greece, Balkan geopolitical risk, and market attacks upon other vulnerable Euro members now and in the future.

[pietillidie]

^No, it's nothing like it in any useful sense; quite a major distraction from the market reality we are observing.

The devaluation of a chaotic exit will damage the creditors, the EU and beyond far more than the Troika stopping the ideological chest beating and negotiating a workable deal. That doesn't happen when the Smiths can't repay money and need to borrow more, though it happens all the time in commercial markets.

Greece defaulting, floating a currency and resetting will be very painful of course, but once you've crushed the life out of people they quickly move well beyond those concerns.

In terms of ranking of who has got more to lose, Greek folk must be LOLing. Such nonsense posturing from the EU is precisely why things are written down and written off as standard practice in business; there are always churlish fools willing to cut their noses to spite their faces.

Syriza's test is to negotiate a balance between incentive and stability, and to take no more than that, starting a reform process along the way.

Meanwhile, expect the bank muppets to jump around like crazed baboons a while longer until the right PR opportunity to save face emerges. Again, it's Syriza's test to give them that out and to take a few public slaps along the way towards finding a workable position. The first of those, of course, was Varoufakis.