This is desperately sad and upsetting (Greek Crisis)

[jimmybobby]

Bodo said:

Russia would be a better partner for Greece, as they are closer to corruption. Greece wants to protect their nepotism, and the EU sees no good in this.

Begs the question if Russia were interested in Greece. They have nothing that could be of use for Russia - no geographic advantage, no educated people, no strategic natural resources. The Greek industry isn't very sophisticated. Every second world country could do what the Greeks do. I don't see a value for Russia.

There are values for Russia. The biggest present is leverage. If they help Greece financially by lending them money it will MASSIVELY ps off the US who are trying to isolate and punish Russia. You cannot put a monetary value on that.

Russia are not broke not by a long shot. Are they in recession? Sure due to the sanctions imposed but a tie up with Greece means an outlet and inlet for funds which they are struggling with due to the sanctions taken against them by the US and EU block.

If they bail out Greece you can be sure Greece will back them and help them out irrespective of what the EU or US want. Russia would most likely use Greece to get what they are selling into the markets and avoiding the sanctions as Greece's terms of a bailout.

If the EU and its lenders fk over Greece (as they see it) then Greece will be hell bent on fking them over right back and if that means helping Russia bypass sanctions then so be it. Greece at that point will have nothing to lose. This is a very big political brinkmanship game and Brussels and the lenders will be the losers

Edited by jimmybobby on Monday 6th July 22:38

[jimmybobby]

Derek Smith said:

jimmybobby said:

The reality is the Greeks will get the bailout they need. The EU will not allow them to walk away. Tsipras has played an absolute blinder in my book. He is playing politics hard ball.

He has given the EU a bloody nose and embarrassed them by showing that the people of Greece do not want their version of a bailout.
He has also played a key factor and that is by meeting and buddying up with Russia the bad guys.

Brussels will now be under added pressure from the US who have a major issue with Russia and wont want Greece siding up with Russia.

Then there is the issue of debt loss. Those who have lent money cannot afford to lose their money (not really) as such the best option is for them to get a deal that may give them a chance to get their money back.

The ECB and so on are openly trying to punish or squeeze Greece into accepting their terms of Austerity. This is a fools errand. If they cause Greece to default and in turn make life even harder for Greeks in an attempt to force Greeces hand then you can be damn sure the Greeks will not accept help from the EU in the future and WILL cut out and go back to the Drachma.

I also would not be surprised to see Russia step in and help out Greece as it will play to Putin's game against the EU and US who he has a serious issu with presently due to their empire building.

That's my opinion as well.

It is not only the EU but NATO as well.

There will be a result of course, there has to be but I doubt it will be one Germany/France wanted. Tspiras is going for a write off of some of his debt. The Eurozone, or rather the Germans and French, are in an extremely difficult position. On the one hand, a Grexit (unlikely though this is) will give them untold problems, being soft on the debt will encourage Italy and Spain to pull the same stunt and demand some of their debt written off.

Between a rock and a hard place. And talking of hard places:

Russia will see this as a way of costing the EU both money and influence. Someone posted that Greece has nothing they want. I think that the Russians want a way in. Turkey has Greece on its borders, also Syria, Iran - all unstable countries, and across the sea there Ukraine.

I bet there's been some discussions with the USA about Greek debt.

I doubt the electorate thought this through, but a No vote was a clever option.

The talk of whose fault it all is misses the point. The only thing to discuss is where they go from here. It will cost everyone, including the Greeks of course, but those not directly involved as well.

Dodgy times ahead.

My understanding is that Greece wanted to renegotiate the terms of their repayments to make them more manageable by changing the length of repayment terms to make it more manageable without having to go through as harsh austerity measures as they are being asked to.

I dont believe it was as much about the size of the debt albeit I saw something on the news today where some woman was saying that Greece had been loaned 200 billion and all bar about 25 billion of that had been used to repay itself which meant it made fk all difference to the country itself.

All it was doing was buying them a little extra time but not giving them the means of actively sorting out their issues. They were trying to keep to unreasonable terms which meant they had to make massive cuts and changes which was causing a massive recession rather than growth.

[Bodo]

jimmybobby said:

Bodo said:

Russia would be a better partner for Greece, as they are closer to corruption. Greece wants to protect their nepotism, and the EU sees no good in this.

Begs the question if Russia were interested in Greece. They have nothing that could be of use for Russia - no geographic advantage, no educated people, no strategic natural resources. The Greek industry isn't very sophisticated. Every second world country could do what the Greeks do. I don't see a value for Russia.

There are values for Russia. The biggest present is leverage. If they help Greece financially by lending them money it will MASSIVELY ps off the US who are trying to isolate and punish Russia. You cannot put a monetary value on that.

Russia are not broke not by a long shot. Are they in recession? Sure due to the sanctions imposed but a tie up with Greece means an outlet and inlet for funds which they are struggling with due to the sanctions taken against them by the US and EU block.

If they bail out Greece you can be sure Greece will back them and help them out irrespective of what the EU or US want. Russia would most likely use Greece to get what they are selling into the markets and avoiding the sanctions as Greece's terms of a bailout.

If the EU and its lenders fk over Greece (as they see it) then Greece will be hell bent on fking them over right back and if that means helping Russia bypass sanctions then so be it. Greece at that point will have nothing to lose. This is a very big political brinkmanship game and Brussels and the lenders will be the losers

Edited by jimmybobby on Monday 6th July 22:38

This sounds a bit like Microsoft buying Nokia's mobile business in order to get a share of a growing market. Except none of the countries have ever been a leader in something.

Greece would benefit Russia, like the GDR benefited the USSR when they were on their knees. A backing from Greece is like a backing from a decommissioned manhole cover. Greece couldn't back themselves in their most prosperous times in the last 2000 years. Greece can only fk the ones who trust them, and in your scenario that would be Russia.

It's unlikely that Greece can be used to secretly circumvent sanctions. It's obvious today, that Greece won't have any money to spend abroad. Not even the Greek people would leave their money in domestic banks - those who had savings pulled their money out from 2008 and invested in flats in Berlin, Geneva and London. Not even the Greek people trust Greece.

The best solution, and a likely one, is that Greece defaults, before more money is invested in a society that needs to adjust themselves. The debt is written off, and Greece can start from zero immediately. There will be fall backs for some decades, but they will not have a debt problem for a long time.

[sooperscoop]

andymadmak said:

Only one day Mr Spendalot loses his overtime and now they cannot make the minimum payments. Now their profligacy is coming home to roost, except it doesn't come home at all because in the twisted world of "blame everyone else", living an unsustainable lifestyle and failing to take care of even the most basic stuff is not actually their fault...no it's those nasty credit card companies faults for failing to spot the lies the Spendalots put on their applications.

The accusation is that the credit card card companies (aka EU/IMF) knew full well that Mr.Spendalot was insolvent but got a call from Audi (aka German/EU banks) that went "You know and I know that Mr.Spendalot is a tt, but he's leasing a Q7 from us, and if you give him more cards, we can keep taking in lease payments and you can milk the idiot for the next 40 years in interest". This results in Mr.Spendalot clothing his kids out of Primark and Grandma is living off Aldi baked beans until she dies through lack of affordable medication.

Part of me thinks the hazard in lending should lie mainly with the lender, not the borrower. On top of that, the primary responsibility of the Greek Govt is to the Greek people, and they should tell creditors to stuff it if their people are going to suffer horrendously.

[Rovinghawk]

sooperscoop said:

Part of me thinks the hazard in lending should lie mainly with the lender, not the borrower. On top of that, the primary responsibility of the Greek Govt is to the Greek people, and they should tell creditors to stuff it if their people are going to suffer horrendously.

And when they need to borrow money again, what happens?

[Digga]

s2art said:

Borghetto said:

Scuffers said:

OK, let's look at this a different way.

if Grease has not joined the Euro, would they be in this st?

Greece's GDP only increased because of the money pumped in by the Banks and the EU. So the reported decline in GDP is from an inflated figure caused by the "easy money". I think they would be just as poor as they are now, but without the debts they are never going to pay. And hey, how great the party was, whilst it lasted.

Not sure about that. Out of the Euro Greece would have had a very competitive exchange rate and might have done better. Certainly tourism would have done well/better.

Yes, they have suffered, in that regard when compared to the nearest alternative package destination, Turkey, but I saw Greece both before, during and after the Euro-splurge and can safely say that - like with other PIIGS - entry to the single currency created significant price and GDP inflation.

[Blackpuddin]

I remember years ago when I used to holiday in Greece every year (before I got fed up by the way they were p*ssing away the beauty of their own country), one popular method of avoiding tax was to never complete house extensions. The tax law said that as long as work was ongoing you didn't have to pay tax on it. Ergo the place was absolutely littered by houses with unfinished upper storeys.

[soad]

Blackpuddin said:

I remember years ago when I used to holiday in Greece every year (before I got fed up by the way they were p*ssing away the beauty of their own country), one popular method of avoiding tax was to never complete house extensions. The tax law said that as long as work was ongoing you didn't have to pay tax on it. Ergo the place was absolutely littered by houses with unfinished upper storeys.

Have you heard about those claiming pensions for relatives long since deceased?
There is a long list of such "activities".

[benjj]

In a way I feel sorry for the Greek people, but.... a far larger part of me just doesn't give a fk.

They've ruined it for themselves. The cradle of democracy has repeatedly elected fools, economic charlatans and pocket lining cheats as their representatives. Now that is coming back to bite them and it's all their own fault.

They should be cut loose with the EU and all associated banks ring fencing further losses and stamping hard to recoup their loans at as good a price as possible. Germany in particular has a responsibility to its people to grind Greece into the ground and toss away the used husk once they're finished getting back what's owed.

At best this should be a minority interest story buried in the business pages. It does have some merit as a lesson on what not to do for 15 year olds studying economics at school.

[AJS-]

benjj said:

In a way I feel sorry for the Greek people, but.... a far larger part of me just doesn't give a fk.

They've ruined it for themselves. The cradle of democracy has repeatedly elected fools, economic charlatans and pocket lining cheats as their representatives. Now that is coming back to bite them and it's all their own fault.

They should be cut loose with the EU and all associated banks ring fencing further losses and stamping hard to recoup their loans at as good a price as possible. Germany in particular has a responsibility to its people to grind Greece into the ground and toss away the used husk once they're finished getting back what's owed.

At best this should be a minority interest story buried in the business pages. It does have some merit as a lesson on what not to do for 15 year olds studying economics at school.

All well and good, except that the last thing the EU actually wants is for Greece to leave the Euro and reissue it's own currency, as it would work out better than the Euro for them. Portugal and perhaps others would soon follow.

It would amount to admitting that their project didn't work.

[Guvernator]

Should Greece leave the Euro? I think definitely, sure it will mean some pain for a few years but I think they have a better chance of getting their economy back on it's feet without the Euro, not because the politicians will do a good job but because having their own currency will allow them to be competitive in the tourist trade again which was their lifeblood. Look at how well Turkey's tourist trade is doing now that all their Mediterranean competition have basically been priced out of the market by going to the Euro.

Will Greece be allowed to leave? I very much doubt it. As others have mentioned, there is too much riding on the Euro project for them to allow that to happen plus the wider implications of the political fallout. This is all merely bluster over negotiations about what APR they will eventually end up paying back.

[plasticpig]

Interesting little chart.

[Digga]

plasticpig said:

Interesting little chart.

You need to see both halves of the trajectory to get the full EZ picture: http://www.tradingeconomics.com/embed/?s=greecegov...

[AJS-]

Digga said:

You need to see both halves of the trajectory to get the full EZ picture: http://www.tradingeconomics.com/embed/?s=greecegov...

What that shows is Greek public spending rising since they joined the Euro. It doesn't show why, but I think rising unemployment as Greece was trapped in an overvalued (on it's terms) currency, and big vanity projects surely played a part.

This is still a failure of the Euro and the systems designed to support it more than anything else.

[andymadmak]

To leave or not to leave...that is the question.
We can all speculate about what SHOULD happen if everyone is thinking straight. But thinking straight by either side gives you several distinctly different answers!

1. From the Greek side leaving the Euro is the only sensible thing to do. As others have correctly observed Greece cannot compete with its neighbors in the Tourist markets whilst it is using a currency that is 40% over values for the state of its economy. It should leave the Euro, stay in Europe, stop talking about defaulting, agree to some additional tax and benefits changes and then reschedule its debts. THEN it should make genuine efforts to sort out its tax evasion problems and to rebalance the Greek economy so that the country is actually living within its means
But Greek pride will dictate that staying in the Euro will remain their stated aim. This, coupled with a firm belief amongst Greek politicians that the EU/Germany WILL blink first, (for reasons set out below) plus the false sense of entitlement engendered in the Greek electorate and amplified by the referendum result will mean that Greece will almost certainly try to play hardball with the EU despite whatever public announcements about "intending to offer fresh proposals" the Greeks may make.
Being "forced out" of the Euro will allow the Greeks to claim self righteously that they should pay back even less than they are currently proposing. You can imagine what the Greek politicians will be saying (with one voice too, as they are all now aligned in the solidarity pact) "Our lenders have brought this on themselves by being too harsh on Greece, we tried to make them listen but now they can go screw themselves"
Maybe this is the real plan? Especially if Russia really is in the wings to offer succour and support for the next few years? Maybe even the USA could be tempted to give aid in exchange for an extra naval base in the med? All of a sudden Greece appears to have a few options...............and they don't all involve having to change their wastrel ways.

2. From the EU side Greece must be made to stay in the Euro. A Grexit would signal the beginning of the end for the Euro. Spain, Portugal, and even Italy would not be far behind Greece in the exit line, especially if the Greek economy shows positive signs of recovery following exit. As these countries leave the value of the Euro will rise, removing the benefits from Germany and France of an artificially low currency and putting further pressure on those other countries teetering on the brink of Greek style collapse. Indeed it could be argued that France itself might not withstand a significant rise in the value of the Euro. Greece must be made to stay in, almost at any cost!

3. From the German side they are betwixt a rock and a hard place. Forcing Greece out of the Euro by sticking firmly to it's principles creates a dangerous set of problems as highlighted above. But by the same token the German taxpayer is unlikely to support significant additional concessions to Greece without clear evidence of substantive public sector and taxation reforms in Athens.... and thus far these reforms have not been forthcoming in anything like the levels of commitment and efficacy that would satisfy Germany.

Moreover, the language used in the referendum debates will make it extremely hard for Mrs Merkel to drum up sympathy with her electorate for the plight of Greeks.
Merkel could cave in and do a deal to keep Greece in on Greek terms but it would be electoral suicide for her, plus the knock on effect as Spain, Portugal et al see what can be done if you just kick hard enough could set in train precisely the thing that Germany is seeking to avoid - the collapse of European economies and the crystallisation of debts that will fall very heavily on German shoulders.


So what will a deal look like? (Let's be candid, a deal will be done.) I think it might include some of the following elements:

1. A 25% haircut for the lenders
2. A significant extension of the terms of the loans
3. Interest rates on Greek long term loans will be made more favourable to lenders
4. Greece will have to commit to significant tax and spend reforms (more than currently agreed) , but implemented over a longer period - in particular a shrinking of the public sector.
5. Greece to be allowed to take special measures to improve the competitiveness of its tourism industry (Spain and Portugal will get this too eventually to keep them quiet) ) Such measure to include changes to VAT rules and additional EU grants (note grant, not loan) for infrastructure development
6. And EU supervisory body combined with stage gates to be agreed and enforced for items 4 and 5 so as to allow "claw back" or cessation of special terms if the Greeks backslide on their commitments - this to try to keep the Germans happy
7. The retirement age in Greece to be brought in line with that of Germany

[Digga]

AJS- said:

What that shows is Greek public spending rising since they joined the Euro. It doesn't show why, but I think rising unemployment as Greece was trapped in an overvalued (on it's terms) currency, and big vanity projects surely played a part.

There was a huge splurge of spending. All sorts of projects - the most visible being infrastructure - were embarked upon. Some were actually okay, others a bit less so, and more than a few were disastrous wastes of money. In amongst all of this, you need to realise that the costs of construction in Greece were significantly higher (i.e. less efficient/honest) than in the northern European nations.

[AJS-]

That seems a pretty sound summary, but I suspect you underestimate how utterly determined the EU will be to keep the Eurozone in tact. It's entirely a one-way process as far as they are concerned and founded on the belief that political will can triumph over economic reality.

This gives Tsipras quite a strong hand in a way; if he has the balls to play it.

However, his hand is seriously weakened by the crisis in Greece at the moment as every day these negotiations drag on more cash points will empty, soon fuel pumps will run dry and hospitals will run out of medicine. Interesting to see Juncker starting the day's negotiations by saying that it's unlikely anything will be decided today.

[NoNeed]

I suspect that the rest of Europe is not bothered by Greece leaving, they are worried that Greece leaves and becomes a success story.

[AJS-]

Digga said:

AJS- said:

What that shows is Greek public spending rising since they joined the Euro. It doesn't show why, but I think rising unemployment as Greece was trapped in an overvalued (on it's terms) currency, and big vanity projects surely played a part.

There was a huge splurge of spending. All sorts of projects - the most visible being infrastructure - were embarked upon. Some were actually okay, others a bit less so, and more than a few were disastrous wastes of money. In amongst all of this, you need to realise that the costs of construction in Greece were significantly higher (i.e. less efficient/honest) than in the northern European nations.

Oh yeah.
I visited a few times between 2003 and 2008. The work they did for the Olympics alone was enormous.

But there was also growth at that time. Reasonably healthy growth at 2-3% a year. In fact it felt far livelier than say Italy or even France. Infrastructure was meant to spur further growth, and the Euro was supposed to make sure it was all done on sound financial discipline.

Of course none of that actually happened.

[plasticpig]

AJS- said:

What that shows is Greek public spending rising since they joined the Euro. It doesn't show why, but I think rising unemployment as Greece was trapped in an overvalued (on it's terms) currency, and big vanity projects surely played a part.

This is still a failure of the Euro and the systems designed to support it more than anything else.

The ECB has always been driven by the needs of Germany and has never really taken into account the needs of poorer members of the Eurozone. This is understandable because effectively the whole Euro project is dependent on the German economy; but it highlights the fundamental flaws in the system. It would be interesting to know what the minimum level of public spending is required to maintain Greece's infrastructure. How much more can it cut before it begins to slide into a third world country?