what happens to Greece if they default and leave the Euro?

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  • grassmarketgrassmarket Posts: 33,010
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    angel1ka wrote: »
    I'm not sure what your problem is, but I've said this to you before: anybody who views a nation of people under the prism of such prejudice is not worth debating with.
    .

    I have nothing against Greeks. I work with them everyday. But until the Greek people admit that the problems they are in are not the fault of bankers, politicians, Germans, Americans or immigrants, but are in fact the logical and predictable consequence of their own behaviour, then there is nothing that anybody else in the world can do to help them.
  • grassmarketgrassmarket Posts: 33,010
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    Nick1966 wrote: »
    Would it possible for Greece to default and continue using the Euro ?

    If I lend £100 to a someone and they don't repay the money, I don't ask them to leave the pound.

    But if they don't repay, it doesn't affect the value of the pounds you have left. If Greece defaults and does not pay a price for defaulting, the whole currency instantly loses all credibility.

    We have already seen that the Norwegians and Chinese are now refusing to to buy Eurozone debt. If Greece defaults, no private investor anywhere in the world will lend any European government any money. A big drawback in a Eurozone where no government is running at a surplus.
  • [Deleted User][Deleted User] Posts: 4,458
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    C19th Fox wrote: »
    Extracts taken from his own words in Athens News with my comments in italics.

    The extreme pieces are state control of banks, taxation of the accumulated debt (whatever that is supposed to mean - how can you tax a negative?)and of high profits of businesses (which will lead to less inward investment) and other savings measures, such as the drastic reduction of spending on armaments. (The Turks would love that!)

    "reinstate all the laws that protect labour and the collective agreements."hardly taking Greece away from some of the issues that have contributed to the problem

    The fact that you don't agree with these policies doesn't automatically make them extreme. But, anyway, the problem with a lot of what Tsipras says is that it is rather vague, and that makes it difficult to evaluate it properly.

    What I meant when I said SYRIZA is not extreme is that their political presence so far has not been extreme....their language, their actions as opposition, their willingness to cooperate with PASOK (not now perhaps, but in the past)...they are a party of compromise and not radical action. Most importantly, the people who vote for them are not extreme...they are mostly moderate liberal leftists.

    I think that my point about SYRIZA will be proven if they ever become government. In government, I doubt they will implement even half of what they claim to stand for, and the policies that will be cast aside will be the ones that now read as the most extreme. I am almost 100% sure of this, but, anyway, you don't have to take my word for this....we will have to just wait and see what happens, *if* they are ever in government.

    PS. I should clarify that when I say SYRIZA I am mostly referring to SYNASPISMOS, which is the main party of the SYRIZA coalition. There are smaller parties within SYRIZA which I would accept as relatively 'extreme', but I doubt they will ever have much say in government.
  • jmclaughjmclaugh Posts: 63,988
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    Nick1966 wrote: »
    Would it possible for Greece to default and continue using the Euro ?

    I suppose anything is possible but I don't see how and the whole point of leaving the € is for the benefit of their economy.
  • Nick1966Nick1966 Posts: 15,742
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    then there is nothing that anybody else in the world can do to help them.

    Indeed.

    If Greece adopts a new currency, it may well find itself unable to borrow money on the international money markets.

    After all, once outside the eurozone why would the Germans want to continue to bailing the Greeks ?
  • [Deleted User][Deleted User] Posts: 4,458
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    I have nothing against Greeks. I work with them everyday. But until the Greek people admit that the problems they are in are not the fault of bankers, politicians, Germans, Americans or immigrants, but are in fact the logical and predictable consequence of their own behaviour, then there is nothing that anybody else in the world can do to help them.

    The Greeks are not a homogenous entity, so I'm not sure what 'behaviour' you are referring to.

    I find your approach to politics in general very simplistic...you use generalisations, are unwilling to evaluate things in context and seem incapable of grasping shades of grey. You also seem to have strong opinions on issues that you obviously do not have much knowledge of.

    Under these circumstances, it is impossible to debate with you.
  • jmclaughjmclaugh Posts: 63,988
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    Nick1966 wrote: »
    If Greece adopts a new currency, it may well find itself unable to borrow money on the international money markets.

    After all, once outside the eurozone why would the Germans want to continue to bailing the Greeks ?

    Greece can't do that already which is why the bailout was needed. The whole point of defaulting and leaving the € is you don't need the bailout and have control over your own economy.
  • Nick1966Nick1966 Posts: 15,742
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    jmclaugh wrote: »
    I suppose anything is possible but I don't see how and the whole point of leaving the € is for the benefit of their economy.

    Exactly.

    It's up to the rest of the EU and IMF if they want to continue bailing out the Greek government.

    It's up to the Greek government if they want to replace the € with a new currency of their own.
  • Nick1966Nick1966 Posts: 15,742
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    jmclaugh wrote: »
    Greece can't do that already which is why the bailout was needed. The whole point of defaulting and leaving the € is you don't need the bailout and have control over your own economy.

    If Greece adopts a new currency, who's going to lend them new money ?

    One benefit of having their own currency is the government could print new money QE style to cover any shortfall tax revenues.
  • grassmarketgrassmarket Posts: 33,010
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    angel1ka wrote: »
    The Greeks are not a homogenous entity, so I'm not sure what 'behaviour' you are referring to.

    Of course they are not. I dare say there are honest Greeks who pay their taxes. There were probably some politicians with realistic views about the world economy. There may even have been some diplomats who told the truth about the state of their country. Maybe some civil servants did not take bribes. Maybe some judges exercised justice impartially, without consulting the political parties.

    It's just that none of these people were ever in a majority.
  • [Deleted User][Deleted User] Posts: 4,458
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    Doc Shmok wrote: »
    So i don't really see why the Greek people shouldn't be less or more responsible for their debts than any other nation? :confused:

    And I don't see why you think I am saying that Greeks shouldn't be responsible for their debts. I think there *is* an issue of how these debts came about that needs to be investigated, but this is an internal matter for Greece, and doesn't have anything to do with the people we owe money to (unless of course they were complicit in any potential wrongdoing).

    But, anyway, inquiries into the debts aside, of course the Greek state should be responsible for its debts. But there is also the practical question of whether the Greek state can realistically pay its debts....and if it comes down to the choice between complete social disintegration and handover of sovereignty, on the one hand, and paying back debt interest on time, on the other, I think that the logical choice for any Greek government would be to default....and it's not as if default wouldn't have negative consequences, so it's not as if the Greeks would be shirking responsibility.

    But I maintain that it is not just the Greek state that needs to take responsibility and endure the consequences of its mistakes. Financial institutions that make vast amounts of money out of lending at a risk, also need to accept the consequences of their risk-taking practices. And governments that invest their taxpayers' interests in risk-taking financial institutions also need to face the consequences when these institutions fail.
  • jmclaughjmclaugh Posts: 63,988
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    Nick1966 wrote: »
    If Greece adopts a new currency, who's going to lend them new money ?

    One benefit of having their own currency is the government could print new money QE style to cover any shortfall tax revenues.

    Nobody except the IMF and even they will need to see a fundamental change in the running of the Greek public finances.

    Printing money is not an ongoing solution to a shortfall in tax revenues, excessive spending needs to be tackled.
  • [Deleted User][Deleted User] Posts: 4,458
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    Of course they are not. I dare say there are honest Greeks who pay their taxes. There were probably some politicians with realistic views about the world economy. There may even have been some diplomats who told the truth about the state of their country. Maybe some civil servants did not take bribes. Maybe some judges exercised justice impartially, without consulting the political parties.

    It's just that none of these people were ever in a majority.

    So you believe that the majority of Greeks are either corrupt, dishonest or deluded.

    You see, *that's* why it's impossible to debate with you. Anyone who thinks like that about the majority of any group of people is prejudiced/racist/xenophobic/a bigot...call it what you want, it doesn't matter...it's not the type of viewpoint I can be bothered to argue with anyway.
  • grassmarketgrassmarket Posts: 33,010
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    angel1ka wrote: »
    And I don't see why you think I am saying that Greeks shouldn't be responsible for their debts. I think there *is* an issue of how these debts came about.

    Let me explain it for you. They came about because politicians the Greek people voted for contracted them. The Greek people demanded that their roads, railways, tramways, airports, sports stadiums, sea ports etc etc be upgraded to west European standards. Their politicians went to the banks and asked for the money. The bankers gave it to them. The people voted for the politicians who had got all this free money for them. They never thought that the money would have to be paid back. They were wrong.
  • grassmarketgrassmarket Posts: 33,010
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    angel1ka wrote: »
    So you believe that the majority of Greeks are either corrupt, dishonest or deluded.

    I can only judge them by the way they vote. Here's the ranking of the world's most corrupt countries. Denmark, Finland, Sweden and the Netherlands are the EU states in the top 10 least corrupt. Greece is in 80th place.

    Here's a list of the easiest countries in the world to do business in. Denmark ranks 5th, Britain 6th. Greece ranks 101st.
  • What name??What name?? Posts: 26,623
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    Nick1966 wrote: »
    After all, once outside the eurozone why would the Germans want to continue to bailing the Greeks ?
    The same reason we gave, and will give them them funds. They would still be part of the EU and they therefore won't be left to starve. If they default that would mean they don't have the funds to pay for medicines, and power - clearly that situation would be intolerable so they know that they will get a handout. It's like the feckless family members on Judge Judy, they go on acting irresponsibly because they can. But that is also why people are talking about contagion. Other countries, that are larger and whose failure would therefore have wider reprecussions might take their lead and the only way to make that route less attractive is to firm to Greece.
  • [Deleted User][Deleted User] Posts: 4,458
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    Let me explain it for you. They came about because politicians the Greek people voted for contracted them. The Greek people demanded that their roads, railways, tramways, airports, sports stadiums, sea ports etc etc be upgraded to west European standards. Their politicians went to the banks and asked for the money. The bankers gave it to them. The people voted for the politicians who had got all this free money for them. They never thought that the money would have to be paid back. They were wrong.

    1) Greek infrastructure is miles away from western European standards. Anybody who has lived both in Greece and western Europe should be well aware of this fact.

    2) For the infrastructure that does exist, Greeks still pay for some of it through very high fees/tolls.

    3) It has been alleged (and in some cases proven outright) that a lot of the infrastructure was over-costed with the companies responsible for the development of the infrastructure bribing Greek politicians for the inflated contracts...this is obviously illegal.

    4) A number of Greek politicians have been accused of squandering money by other means too, and very few of these people have ever even been brought to court....this is something that needs to be investigated.

    5) Incoming governments have almost consistently revised their predecessors debt/deficit figures upwards...I believe that this was often done for party political purposes, and given that none of the two parties can claim to be reliable on the reporting of figures, how do we know when to believe them? when they are under-reporting while well into government, or when they are over-reporting when newly appointed? ....This is also something that needs to be investigated especially given the recent accusations from members of the *independent* former statistics authority.

    6) The money the Greek state borrowed was borrowed at an interest, it was hardly free money that the banks gave away.

    7) The Greek primary budget (budget without debt interest payments) has mostly been balanced since the mid 90s, and government spending actually started to fall around that period. This means that tax receipts mostly covered all state expenses from then onwards (with the exception of a couple of years around the Olympics), while the borrowed money mostly paid for debt interest payments on *previous* debts accumulated in the 80s.

    8) The 80s was the decade during which a whole set of services and public institutions were set up, where they had never existed before....they never reached western European standards either, but they still cost a lot of money (that is when the bulk of the debt was accumulated)...I can think of two reasons for this: a) any state building practically from scratch is bound to cost a lot of money; b) the 80s was also a decade notorious for scandals, corruption, etc, so I have no doubt that a lot of the borrowed money was pocketed by certain individuals...unfortunately, as has been often the case, very few of these individuals were ever even brought to court and even the ones that were brought to court were subsequently acquitted on questionable grounds.

    ...anyway, I've repeated these exact same things on this forum a million times...and if you are interested in researching them (because I don't expect you to take my word for them), there is plenty of information both on- and offline (although there is plenty of misinformation too). If you are genuinely interested in Greece perhaps you should read about our history and politics, and I urge you to try a variety of sources and stay away from media reports - they are the most biased and inaccurate of all.

    Of course you can just carry on selectively reading and listening to those views that confirm your prejudice...it's up to you really, and there is nothing further I really want to say to you on the matter.
  • Nick1966Nick1966 Posts: 15,742
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    [Greece] would still be part of the EU and they therefore won't be left to starve..

    Should Greece be asked to leave the EU - so people can be left to starve - now the countrty has run out of money ?
  • Nick1966Nick1966 Posts: 15,742
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    angel1ka wrote: »
    The Greek primary budget (budget without debt interest payments) has mostly been balanced since the mid 90s, and government spending actually started to fall around that period. This means that tax receipts mostly covered all state expenses from then onwards

    What's stopping Greece from declaring itself bankrupt right here, right now ? It would cancel all of outstanding debt. Then the Greek government can carrying on running a balance budget with tax revenues covering state expenses.
  • [Deleted User][Deleted User] Posts: 4,458
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    I can only judge them by the way they vote. Here's the ranking of the world's most corrupt countries. Denmark, Finland, Sweden and the Netherlands are the EU states in the top 10 least corrupt. Greece is in 80th place.

    Here's a list of the easiest countries in the world to do business in. Denmark ranks 5th, Britain 6th. Greece ranks 101st.

    Yes, that's the ranking of *perception* of corruption...Greeks widely perceive their political classes to be corrupt, there is no doubt about that.

    That doesn't mean that the majority of Greeks are corrupt. It only takes corruption in the higher ranks of society to create a climate of general mistrust between the citizen and the state, and this is precisely what is happening in Greece (and it has its roots way back to the inception of the Greek state, if not before).
  • [Deleted User][Deleted User] Posts: 4,458
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    Nick1966 wrote: »
    What's stopping Greece from declaring itself bankrupt right here, right now ? It would cancel all of outstanding debt. Then the Greek government can carrying on running a balance budget with tax revenues covering state expenses.

    We've been through this before. Tax revenues will not necessarily withstand a potential default, so even if the primary budget is balanced now, this won't necessarily be the case after a default.

    And I'm not sure why you are asking me this question anyway...I think Greece should default, face the consequences, and then start towards fixing its problems (and there is much to fix). I don't think that the current situation is sustainable.
  • Nick1966Nick1966 Posts: 15,742
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    angel1ka wrote: »
    ...I think Greece should default, face the consequences, and then start towards fixing its problems ...

    Think I agree with you.

    And should Greece adopt a new currency or stay with the euro ?
  • [Deleted User][Deleted User] Posts: 4,458
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    The same reason we gave, and will give them them funds. They would still be part of the EU and they therefore won't be left to starve. If they default that would mean they don't have the funds to pay for medicines, and power - clearly that situation would be intolerable so they know that they will get a handout. It's like the feckless family members on Judge Judy, they go on acting irresponsibly because they can. But that is also why people are talking about contagion. Other countries, that are larger and whose failure would therefore have wider reprecussions might take their lead and the only way to make that route less attractive is to firm to Greece.

    Which Greeks in particular are still acting irresponsibly and how? Which actions in particular do you consider irresponsible?
  • [Deleted User][Deleted User] Posts: 4,458
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    Nick1966 wrote: »
    Think I agree with you.

    And should Greece adopt a new currency or stay with the euro ?

    I think Greece should never have adopted the Euro in the first place, and that was my position at the time too.

    As for now...I don't know. I believe that in the case of default it would be in our interests to adopt a new currency, but I don't know enough about economics to have a definite view.
  • grassmarketgrassmarket Posts: 33,010
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    angel1ka wrote: »
    Which Greeks in particular are still acting irresponsibly and how? Which actions in particular do you consider irresponsible?

    The entire Syriza party, and all their voters, are behaving like spoilt children. You cannot expect to repudiate your debts and continue to enjoy all the benefits of Euro membership. When you show yourself to be an irresponsible debtor, you can't expect people to lend you more money. They are simply lying to the voters if they think their actions are going to be consequence-free. They complain about austerity, but their own actions risk creating a degree of austerity far more abrupt and miserable than anything the previous government agreed to.
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