It's all Greek to me!

[Baptismbyfire]

Please, someone explain this whole Greek fiasco to me.

Now, the Prime Minister is saying that he will have the people vote on the issue (of course he's trying to dodge the bullet),

But...

if people vote to not agree to the whole deal, and get kicked out of the EU, doesn't that essentially make their economy whole lot worse?

I understand how your Greek grandmother doesn't want her pension cut, when it's not her fault the government mismanaged the budget and lied about it, but if they can't pay off their debt, the nation's credit rating would plunge, and wouldn't that make their currency essentially useless?

Isn't it just better to accept the deal?

 

[a777pilot]

No, it's always easier to blame your problems on others.

 

[Craig234]

Short version? Greece's leaders wanted in the EU. Goldman Sachs had a plan for them to profit from that would misrepresent Greece's debt and help them get in the EU.

(Sound familiar with Wall Street demanding bad mortgages they could profit from?)

It worked. Before long it was clear about Greece's problems.

They have tried to address the problems onthe backs of the people, with 'austerity'.

The people don't care for that solution and it's being resisted.

As usual there are the wealthy interests and there are the people's interests and they are at odds.

 

[Oric]

Look at the article for "Philhelenism" on wikipedia, it has a lot of insight on why Europe is falling at the same con again and again ...

 

[Baptismbyfire]

Short version? Greece's leaders wanted in the EU. Goldman Sachs had a plan for them to profit from that would misrepresent Greece's debt and help them get in the EU.

(Sound familiar with Wall Street demanding bad mortgages they could profit from?)

It worked. Before long it was clear about Greece's problems.

They have tried to address the problems onthe backs of the people, with 'austerity'.

The people don't care for that solution and it's being resisted.

As usual there are the wealthy interests and there are the people's interests and they are at odds.

Thanks for the background info, but regardless of how they got there, my question is wouldn't rejecting the rescue plan be more harmful to them than accepting it? What would happen if they default on their loans?

 

[alphatarget1]

Thanks for the background info, but regardless of how they got there, my question is wouldn't rejecting the rescue plan be more harmful to them than accepting it? What would happen if they default on their loans?

You should not be listening to a liberal who hates America on why this happened.

The people of Greece has deliberately defrauded the EU with the help of Goldman Sachs. Goldman Sachs and Wall Street did not start this. Basically Greece doesn't really produce much and runs a big deficit every year. Investors are spooked and they aren't buying Greek debt anymore. If Greece does not produce enough to sustain their standard of living, why should the more productive Germans pay for it?

EU = socialism on steroids, and their liberal utopian socialist paradise will crumble before our eyes in the next decade.

 

[the DRIZZLE]

Your understanding is largely correct even though it is incomplete. The fact is Greece was never really a first world country and never belonged in the EU. Goldman are scumbags but they aren't the primary cause of this.

Greece can leave the EU and default and will instantly become a third world country or they will be the German's bitch over the next 15 years to pay their debts. They were living a false level of prosperity which is abruptly ending.

 

[PokerGuy]

The first thing you have to do OP, is to learn to ignore any of the drivel posted by our resident village idiot, Craig.

The core problems in Greece are years of unrestrained spending, cheap lending and failure to implement financial reforms. Then the world economy tanked, and Greece, without the ability to fire up the printing presses like the US, is up the creek.

If the people reject the measures, the bailout package crafted last week falls apart and Greece likely gets booted out of the Euro zone. That essentially puts it on the path to third world status. If they don't, they'll get a partial bailout and a chance to stay in the Euro zone.

 

[brencat]

Greece has a history of defaulting on its debt. The country probably did not deserve to be in the EU. Their people are basically lazy and the country is completely dependent on tourism. Some outrageous percentage of the population works for the government in some form or fashion. It has been this way for nearly 30+ years.

There is no way the Greek people will be willing to tolerate 15 years of austerity and sacrifice. They will end up defaulting I'm sure of it, and will be booted from the Euro. The Germans and French are trying desperately to prevent that from happening due to all the exposure their banks have in the form of Greek debt that is marked way too high on their pads relative to the actual market clearing price. Even a 50% haircut which was the recently negotiated price is probably not the market clearing price for Greek debt. Try 20-30 cents on the dollar.

An ugly situation. Now the bigger problem is Italy... if you think the Italians are going to accept austerity and be expected to pay their debts in full when they see that Greece was just offered a 50% haircut after whining like a b*tch, you are kidding yourself. The writedown party is just getting underway.

 

[fskimospy]

An ugly situation. Now the bigger problem is Italy... if you think the Italians are going to accept austerity and be expected to pay their debts in full when they see that Greece was just offered a 50% haircut after whining like a b*tch, you are kidding yourself. The writedown party is just getting underway.

And what's really messed up is that there is zero reason for Italy to default on its debt in normal circumstances. It has a primary budget surplus, but the poor European response to the crisis has their bond levels spiking so high as to make it impossible for them to afford debt rollover.

 

[khon]

Greece actually got a pretty sweet deal, but the public will probably reject it anyway.

Noone ever likes to cut back on their lifestyle, even if it is the best solution.

 

[HumblePie]

Italy, Greece, and Spain are the laziest and most useless of the EU countries. Have been for a long, long, LONG time. Don't get me wrong, I love the atmosphere as a tourist of those countries. I love Italian and Greek cooking (Spanish food is mostly bland in my opinion though). The majority of their populace for each country needs a wake up call though. What's worse is most of their government is corrupt as heck too. Italy has had a massive corruption in their government for a long time. When whole cities are practically run by the "family" the government just does nothing.

Only other country I am surprised to this day that isn't in bad shape is France. Half their people are lazy as fuck, but the other half are actually fairly productive. Their government is fairly corrupt; although not as bad as Italy. They at least produce things that are exported and don't rely exclusively on tourism. Although the majority of their exports are food or fashion oriented.

 

[ElFenix]

Although the majority of their exports are food or fashion oriented.

actually it's trains planes and automobiles (better have my do-nuts).

they're a major arms exporter and their share of airbus is huge. also a big time chemical exporter. yes, wine is a big export as well.

 

[Craig234]

Greece actually got a pretty sweet deal, but the public will probably reject it anyway.

Noone ever likes to cut back on their lifestyle, even if it is the best solution.

Least of all the top 1%, but since they're up hundreds of percent taking it from others who are getting less and less a share, it's not an issue for them. Let the 99% pay for the 1%.

 

[Martin]

The EU deal *is* a default, despite the contortions of the politicians and the media - a major aspect of it is 50% write-down for private holders of Greek debt.

I think the referendum is a great idea - the prime minister did the what he thought was best - massive austerity and reform, but also debt relief - but saw incredible protests and opposition. Now the people can choose - take the deal or leave the EU. A lot of Greeks have been bemoaning the loss of sovereignty, the loss of the drachma etc. Well, they get choice now, a choice they did not have 12 years.

 

[Baptismbyfire]

Okay, thanks for all the explanations, but I guess the question I want answered is

"Don't they basically have no choice in the measure? Wouldn't austerity be forced on them in one form or another, whether it's the bailout deal or devaluation of their currency?"

As another poster said, they can't print money like US, so where would all the money for the pension come from if they refuse to tighten their belts?

Or am I not correctly understanding how default works?

Since the French and German banks own the Greek debts, are Greek banks cleared of all obligation if they just default, like a person declaring bankruptcy? Of course it will ruin credit ratings, and no one will do business with them anymore, but does it actually save money in the short term?

Confusing :\

 

[Munky]

They could print money if they leave the EU, and it's arguably better for them if they do. As it is, they are only going deeper into debt from the "bailout", on the assumption that their economy will magically recover and they can grow their way out. How that's actually supposed to happen is anyone's guess.

Edit: about the banks, the debt will be cleared by voiding all the banks' so-called assets backed by the Greek debt, which will most likely render them insolvent and bankrupt.

 

[CPA]

Least of all the top 1%, but since they're up hundreds of percent taking it from others who are getting less and less a share, it's not an issue for them. Let the 99% pay for the 1%.

you are getting more ridiculous by the hour.

 

[fskimospy]

Okay, thanks for all the explanations, but I guess the question I want answered is

"Don't they basically have no choice in the measure? Wouldn't austerity be forced on them in one form or another, whether it's the bailout deal or devaluation of their currency?"

As another poster said, they can't print money like US, so where would all the money for the pension come from if they refuse to tighten their belts?

Or am I not correctly understanding how default works?

Since the French and German banks own the Greek debts, are Greek banks cleared of all obligation if they just default, like a person declaring bankruptcy? Of course it will ruin credit ratings, and no one will do business with them anymore, but does it actually save money in the short term?

Confusing :\

Default might really be the best option for the Greeks, depending on what the ECB decides to do. When talking about national default, Argentina usually comes up. Default for them turned out to be a pretty great idea, and GDP growth has been steady and positive since then.

The likely outcome of a Greek default isn't that they are cleared of all obligation, but that their obligations will be met for a small fraction of their current value. They have a choice in the matter, because they could simply decide not to pay any of their bonds. I'm not saying this is a good idea, but it is something they can leverage to get a better deal.

 

[peonyu]

Replace "lazy Greeks" with "lazy blacks" in all of these comments and then see how it sounds. The Greeks are the same as other Europeans - with the exception of being taken advantage of by the Germans [no surprise] and the French.

They are no more lazy than any other people.

 

[Macamus Prime]

Shakespeare called, he wants his joke back.

 

[nageov3t]

my understanding is that the Troika is basically forcing Greece to take its medicine if they want help from its foreign lenders.

for obvious political reasons, Papandreou doesn't want to be seen as unilaterally forcing austerity measures on the Greeks, lest his government gets thrown out on its ass (because, really... no matter how ridiculous it might seem to us outsiders, if you grew up thinking that you could retire and receive full wage benefits at the age of 50, wouldn't you be pissed off at the guy seen to be taking that away?)

the whole thing is a gambit that the Greek citizens will be willing to vote to make sacrifices, at which point Papandreou will suddenly have political cover for the austerity measures he's going to have to put into place.

and if it fails, the entire thing will blow up in his face and he'll be kicked out of office anyways (after which the Greek country as a whole will be worse off than if he had just pushed austerity unilaterally, but what does he care, he won't be in office after that)

 

[woolfe9999]

Thanks for the background info, but regardless of how they got there, my question is wouldn't rejecting the rescue plan be more harmful to them than accepting it? What would happen if they default on their loans?

It isn't just that it would be more harmful for Greeks to reject it. It may crash the entire EU economy, and then the U.S. after that, possibly the entire world.

 

[Jaskalas]

Replace "lazy Greeks" with "lazy blacks" in all of these comments and then see how it sounds. The Greeks are the same as other Europeans - with the exception of being taken advantage of by the Germans [no surprise] and the French.

They are no more lazy than any other people.

Greece's debt makes it 'lazy', wanting others to pay to maintain an impossibly high standard of living. When folks stop buying Greek debt their standard of living comes crashing down. That'll be their new reality, but the people refuse to accept the inevitable.

America has the same crisis here at home, but our printing of money postpones the dire consequences of paying for the present with the future. Some day not even our currency will survive this folly, but today it is Greece and the Euro.

 

[PokerGuy]

No matter how the Greeks try to get through this, one thing is certain, their government and the people will be forced to spend less. Either they take this deal and austerity measures go into effect, or they refuse the deal, outside investors stop providing money to support their spending, and they get forced back into their own currency which they can print into oblivion.

No matter what, they will be forced to face the reality of living within your means. The US has more options to avoid that reality for a while.