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The problem is that it is not just Greek banks that hold greek soverign debt. If they default it could bring down (or at least severely damage) some big banks in France and Germany.
I'm behind the 8 ball here and maybe there's a thread about this already, but with school being done for awhile I've had the chance to read a lot more and am curious what other people think.
After reading more about what led to Greece's debt crisis and the way Greece is handling it, I can't believe Europe has bent over backwards to try and save Greece. Greece's problems were unique to Greece and were unlike the banking crisis in other countries, the European Union should have just let them default from the get go and focused on solving problems that actually affect Europe as a whole. They're a country with only 11 million people and a widespread culture of bribing tax collectors in order to avoid paying any taxes as well as rampant government spending with too many overpaid government employees. They also lied about their debt for years because they were only allowed into the European Union in 1992 with certain contingencies about their spending.
Point being, it mystifies me why Europe didn't just let Greece default and focus on subsidizing its debt holders while letting Greece go up in flames. It's not a big country population wise, it hasn't been honest with the rest of Europe at all, and its problems are specific to only Greece. The rest of Europe is basically paying the taxes a huge part of Greece's population have evaded for years. Has this already been discussed by everyone/am I missing something/what does everyone think? Greece defaulting seems inevitable anyway but the damage to the world's economy when that happens seems like something that's blown out of proportion.
The problem is that it is not just Greek banks that hold greek soverign debt. If they default it could bring down (or at least severely damage) some big banks in France and Germany.
That's why I suggest you subsidize those banks (when I said "Greek debt holders" I didn't make it clear that I meant any bank, Greek or not, holding Greece's debt), particularly the ones in France and Germany, but you don't bend over backwards trying to save the country from default when its the country's own damn fault. You don't need to save Greece to save those big banks.
wasting half a trillion bailing out the goat ers who dont wanna give up their current welfare lifestyle living on credit
dunno why they continue to bail them out when a country of 11m ppl dont produce
Greece never should have been allowed into the EU. It isn't really a Western European society.
So the real, original fault lies with the EU.
It's going to be really bizarre to watch Greece turn into a third world country. It could degrade into total anarchy when those pension checks quit coming.
Especially frightening since Athens was the "birthplace of democracy".
I think we see exactly this eventually.
The whole idea behind "saving" Greece is because dumb s will flip the out and do re ed stuff like bank runs if they here "ZOMG greece is going under, panic!!!"
It's not that greece is actually important, it would just cause so many problems in the market. The rational thing to do is like DoK said, Greece just subsidize their debtholders so that it doesn't compromise the Euro and kick those goat ers the out.
"not that greece is actually important"
bull . Big French, other banks hold many $Bs in Greek debt. Greek defaulting would be a huge mess, EXTREMELY important mess.
I read where the money lent to greece now is in fact turned around and taken out by the lending banks as interest on the Greek debt (avoiding default on interest), so Greece actually touches very little of the bailout.
Did u even read the part where me and dok said to reimburse all holders of Greek debt, INCLUDING THE BANKS? Damn son, I can excuse stupidity that's not your fault but u didn't even read
I hope you enjoy life as a re .
Greece should be already considered a third world country. The stuff listed in the OP (rampant corruption, systemic tax evasion, high poverty index, etc) are typical traits of 3rd world countries.
I think the concern was that Greece's lenders weren't willing to take the principle write-offs that would have come with a direct bailout.
As far as why bail them out, it's simply to protect bond holders. There's no severe consequences to Greece if it decides to default on some or all of it's debt. There might not get access to credit if they do, but it's debatable there's access to credit for them right now anyways with the problems they have. Furthermore, they'll be off the hook for paying debt/interest on debt, and can actually reroute some of that money towards the country/population.
Argentina did this by defaulting on part of it's debt about 10 years ago, and it experienced fairly good growth immediately after. They offered a credit swap at an 80% or so discount, which some bond holders took. The rest are still trying to get paid, and likely never will.
It's obviously not a sustainable strategy if they keep spending like crazy, but when a country is cornered like that, some options that weren't on the table at some point, will become available.
Don't forget also that if Greece defaults, some other countries in somewhat similar dire situations might want to follow the same road. Ireland, Portugal, Spain come to mind.
I can attest to that, I live in one
The bond holders already took a 70% haircut in the last "restructuring" of debt in exchange for some Greek concessions. Now the Greeks don't want to make those concession, vote in a radical leftist government who now wants to renogotiate again.
For you novices, the haircut means the bondholder agreed to accept only 30% of their money back, essentially losing 70%.
The Greeks are broke s and will never have that money to pay back. Every one is in denial starting with the Euro bankers.
Greece at one time manufactured goods and exported them for other goods and money. They don't do that any more and have turned into a broke welfare state living off borrowed money to pay expenses, pensions, etc.
I say let the ers default, bring back their own currency, and then let the world watch hyper inflation, food shortages, rioting in the streets. Then go to Spain, Italy, Portugual, and say, "okay ers, pick your poison: make some serious budget changes, or become Greece X 10". Let Greece be the beta for these other countries, as well as our own.
^ the problem with that is that bond holders are left with nothing. On top of that, if you let them roll their own currency, they'll do it with an absolutely low value which would be a hit to the people's pockets, but largely avoids any hyper-inflation.
The riots on the streets are here already. The country isn't going anywhere and sooner or later they will recover. A depreciated currency means labor becomes cheap and compe ive.
Like I said, in the long run, there are no severe consequences for Greece. At worse, they'll remain a 3rd world country in a constant cycle of growth/inflation/devaluation. Most 3rd world countries are like that.
Greece's 'potato movement' grows in power
http://www.aljazeera.com/indepth/fea...126662269.htmlTzanis and his mayoral team have plunged into a series of social measures. They have secured European Union funds to assist poor children and battered women, and have already organised six distributions of rice, flour, potatoes and oil on the town's main square.
Tzanis has also defied powers greater than himself to raise his voters' quality of life. He recently bulldozed his way to take control of a municipal waterfront leased to the Peiraieus Port Authority - a wealthy public company that runs the country's largest container terminals in collaboration with China's COSCO - and is organising children's activities there.
He said he is also in talks with Formula One to recast his municipality's coastal highway, already highly developed for truck traffic, as a racetrack abutted by parks. His goal is nothing less than a recreation economy to tame a 50 per cent unemployment rate.
Both in Katerini and in Keratsini-Drapetsona, the potato movement is championed by those who have understood the sea change in Greek values: independence from party and special interests, and a dedication to public service. These "new values" may today be limited to grassroots activism and local government, but judging by the ferocity with which Greek party hierarchies are being shaken, it may only be a matter of time before they reach the top.
It's "european union" not "western european union".
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