Greece faces "the spectre of bankruptcy" (again)

Discussion in 'Politics & The Economy' started by Rasczak, Jan 30, 2012.

  1. Rasczak

    Rasczak
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    The Greek Prime Minister has warned the country faces “the spectre of bankruptcy and all the dire consequences that entails”:
    We’re on the brink, warns Greece ahead of summit - Telegraph

    The PM said that unless the country’s international backers agreed to a new bail-out, Greece would be unable to pay off its loans and be forced out of the eurozone. Yesterday the Greeks rejected a German plan for the EU to takeover the country's finances.

    So what should the EU do here? Allow Greece to fall out of the Eurozone (surely a long term credibility issue for the Euro if that happens)? Or stump up more cash to keep the country from bankruptcy? Should Greece be compelled to take on foreign EU servants as it's Ministers?
     
  2. kav

    kav
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    In the industry I work in, recent months have seen a significant amount of work go into analysing our systems to determine whether or not they will be able to cope with a country dropping out of the Euro and going back to its original currency. I don't know how close we are to that (or not) but what I do know is that there is a lot of time and effort being invested in being prepared for it should it happen.

    The take is that if it does happen, the change will go ahead on a Friday as the markets close, and when they reopen on Monday the new old currency will be back in place. There'll probably be a bit of overtime for the IT folks that weekend...
     
    Last edited: Jan 30, 2012
  3. johntheexpat

    johntheexpat
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    The Greeks should get their house in order or be dropped from the Euro. I don't think dropping one or two countries from the Euro would do its credibility any harm at all. It would probably enhance it. When the Finance World sees that the Euro is no longer prepared to allow countries to be carried by the rest, the Euro will be perceived as a much more viable entity and thus a much more powerful grouping.

    Sorry Greece, but my vote is for you to go. I don't believe the political will is there to actually get the country sorted out. The corruption, the tax evasion, its all endemic and no-one seems to be man enough to sort it. I shall wish you luck as I wave you goodbye, Cheerio, there you go, on your way!
     
  4. Rasczak

    Rasczak
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    But it could be very devisive and harmful to European integration. If countries are 'dropped' from the Euro every now and then, investors seeking the stablity of the Euro would invariably look to avoid countries likely to be so effected. This could create a two-track Europe with the poor getting poorer whilst all investment went into AAA, super-safe countries like Germany.
     
  5. BISHI

    BISHI
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    I agree Greece should be cut loose - I do not agree that the Germans should be allowed to run Greeces finances - all they will do is privatise everthing and, as a Greek chap pointed out on Today this morning, what is the poit of selling your assets at the bottom of the market when no body is buying and they will be woefully undervalued..? I guess the Germans could go in, buy the whole infrastructre assets for a song and then charge the Greeks through the nose for what was already theirs whilst taking the money they paid straight back to repay their German banks......................win win for Germany.
    Oh wait a minute, isn't that what the Euro is all about anyway...?
     
  6. johntheexpat

    johntheexpat
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    :laugh:
     
  7. johntheexpat

    johntheexpat
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    Well, it would certainly be devisive along the lines of those who get chopped and those who don't :D

    But if dropping Greece and a couple more of the wekest links firms up the rest of the zone and bucks up the ideas of those who remain, then can that be a bad thing? The Euro's problems all seem to stem from over-expansion into countries that really shouldn't be there, so a re-trenchment shouldn't harm the core at all. The big problem would be Italy. If they watch and learn from what happens to the minnows, then that would greatly enhance the Euro as a concept. If they don't learn and continue as they are and have to be forced out, then that would, with any shadow of a doubt, be a hugely serious, possibly fatal blow to the currency.
     
  8. Wild Weasel

    Wild Weasel
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    It's too late for that now. The Euro project was the EU's Operation Barbarossa and now they're stalled in a financial winter.
     
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  9. EarthRod

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    Good way to put it.

    :smashin:
     
  10. Cloverleaf

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    Greece is a basket case. The EU needs to grasp the nettle and kick them out the Euro.

    The only barrier (and it's a big one) is the Euro fanatics who believe that the currency has a divine right to succeed.
     
  11. Pecker

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    Just a slightly different option.

    How about they pay off / write off most of Greece's debt. Leave them with an amount they can comfortably afford to pay without sacking half the public sector.

    Then kick them out of the euro.

    Say they can come back when they've showed financial stability for maybe a decade.

    It'd cost a lot of money. But then again, pratting around paying bits off here and there every few months isn't cheap, and if they just defaulted the cost could be even higher.

    Steve W
     
  12. Wild Weasel

    Wild Weasel
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    I'm not sure how Ireland, Portugal, Spain and Italy, who are also suffering under austerity programs would feel about that.

    Portugal is sliding away at the moment. Their 10 year bond yields have shot up to 17%.

    Thanks, well it was either that or Operation Common Market Garden - A bridge too far. ;)
     
  13. BISHI

    BISHI
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    Thats better...!
     
  14. Rasczak

    Rasczak
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  15. Wild Weasel

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    Elections are due in a few months, so no politician wants their name on this plan. A 22% cut in the minimum wage to prop up a bunch of foreign banks? It'd be electoral suicide.
     
  16. Rasczak

    Rasczak
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    What is the alternative? They crash and burn out of the Euro? I would have thought that would be even worse. This said, I expect the Germans will front up more cash rather than let that happen.
     
  17. Wild Weasel

    Wild Weasel
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    Well that's the weakness of democracies isn't it: the inability to make tough or unpopular decisions. So much easier to do nothing and bury their heads in the sand.
     
  18. Rasczak

    Rasczak
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    The latest Greek bailout still seems to be in the balance. Despite "superhuman" efforts (according to one Greek Minister) to comply with austerity demands made by the Eurozone, key EU leaders are not convinced:

    BBC News - Greece has made 'superhuman' sacrifices, says minister

    Eurogroup president Jean-Claude Juncker said Greece had not showed that it was committed to the austerity plan and has demanded the country finds an extra 325million Euros of savings.

    Surely its time for Germany to stop whinging and stump up the cash?
     
  19. Wild Weasel

    Wild Weasel
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    Maybe Germany doesn't want them to meet the terms. Everyone knows Greece is a lost cause.
     
  20. Kebabhead

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    Begs the question why the were allowed to join the Euro in the first place
     
  21. Wild Weasel

    Wild Weasel
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    The European ruling elite thought they could advance their superstate 'project' while ignoring economic & cultural reality.
     
  22. johntheexpat

    johntheexpat
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    Interesting stuff on the French news last night. A whole segment on why Greece will never make the grade. Tens of thousands of dead who still claim pensions etc, a state that claims not to know how much it pays its employees, a promise to sell of state assets for 50Bn €, which hasn't happened yet, the process hasn't even started and they are only worth (at very best) 19Bn€. And so it went on and on. If true, the Greek government has absolutely no intention of playing ball. Presumably just enough to get the next tranche of aid and then take the money and run.
    I got the impression we are being softened up for the announcement that they are going to let Greece 'go'.

    'Bout bloody time I say, especially if what they said last night was true, and I have no reason not to believe it.
     
  23. EarthRod

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    They probably thought a bit of Greece would make the cogs of EU bureaucracy turn smoother.
     
  24. Rasczak

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    The Greek Finance Minister is implying that elements within the German, Netherlands, Finland and Austrian Governments have an attitude of scepticism towards Greece. Surely the bailout has to happen?

    On an aside the BBC is quoting some interesting statistics relating to life in Greece:
    - 20.9% unemployment
    - 27.7% in poverty
    - 1 in 5 of those in poverty can't afford meals with meat every other day

    Shocking figures for an EU state. How can we all be one big happy family in Europe with such poverty and division between the members?
     
  25. johntheexpat

    johntheexpat
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    My money is on it not happening. The Greek Government can't be trusted (see my post above) so how can anyone justify another huge loan to them?
     
  26. J1mbo

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    Absolutely.

    One of my friends is Greek and on visits home was appalled by the how bad conditions have become in a supposedly modern country. Everyone she spoke to were in favour of pulling out of the Euro and 'resetting'. I'm not sure of the technicalities so dunno if it would help, but the austerity measures seem to be driving Greece further into poverty just to stay in the Euro.
     
  27. Rasczak

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  28. johntheexpat

    johntheexpat
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    Would you lend money to Greece? Before this all kicked off 'big time', they got Goldman Sachs in to deliberately cook the books. Tax evasion in Greece, like many Meditteranean countries, is a national sport. Tens of thousands (at least) of dead are still 'claiming' pensions, the Government lied, barefaced, about the willingness to sell and the value of, some 'National Assets'. Its just one revelation of rampant corruption after another. And it appears that its endemic. OK so the people have been driven to it, maybe, and the system has grown to accomodate it, but its got to stop.

    But there is no sign of it stopping. So why throw billions into a bottomless pit?

    Certainly it would be unacceptable if people die of hunger, but should the EU really consider baling out such a mess of a system, just so it can continue along its reckless, self-destructive path for a bit longer? Its crunch time.
     
  29. Kebabhead

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    i suppose we can thank Labour for not letting the UK join the Euro
     
  30. johntheexpat

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    :laugh::laugh:
     

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