Greece defaults on its debts

http://www.wsj.com/articles/some-greek-banks-to-open-for-pensioners-1435653433

I've read in other articles on the matter that the Greek default could have potentially devastating economic and geopolitical effects. What do you make of this situation?

 

[DuskEngine]

Greece doesn't have any real trade or holdings with China, Brazil, or Russia).

Russia is Greece's biggest source of imports. It gets the majority of its gas from them.

 

[exball]

Is anyone really surprised this happened?

 

[DangerousGas]

It's not surprising. Greece is a tourism-based economy, and tourism hasn't been as much of a cash cow as usual post-2008.

There's also the fact that most of the high-value assets in Greece are owned by the church, and they're not letting them go. If the church sold off all the land and gold that it owned, it'd go a long way towards helping the situation financially. However, Godboy gotta have his bling.

 

[Holdek]

America is not that much better off then Greece in reality. But because it's working with such a larger GDP it just takes much longer.

This is problem was called Debit Crisis on Feb 17 2014. Remember that?

All that fussing and hubbub only delayed the problem by 3 years. Sooner or later the U.S. will have to default as well, at this sec the U.S. owes 17.4 trillion dollars in debt. It's income through taxes is 2.2 trillion.

https://youtube.com/watch?v=Ln6VGCB8f_c
Not too bad right? Well it gets worse: the U.S. Is currently paying almost 300 billion dollars a years in interest fees alone.

http://www.pewresearch.org/fact-tan...about-the-national-debt-what-you-should-know/

Now the icing on the shit sundae that is the U.S. Government currently owes the Federal Reserve bank 4.3 trillion dollars which amounts to interest payments of 1.68 billion dollars a year. Keep in mind now the Federal Reserve, despite its name, is a privately owned bank whose owners are protected by U.S. Law from disclosure or censor. Right now, no one not even your president, can ask who owns the Federal Reserve or audit it for violations of tax or industry law. The Federal Reserve prints all of the U.S. Currency as of 1923.

Nice set up eh?

The Western world will default sometime in the next 20 years unless changes are made, you cannot borrow money indefinatly, sooner or later the interest alone will eat up the countries GDP. The U.S. is getting close, damn close, too damn close really, but every other Western nation is walking the same line, Canada, UK and Europe.

The US is not in danger of defaulting. Our debt-to-GDP ratio is still within the safe zone, our treasury yields are low and inflation is low. Where we wouldn't want to be on that score is Japan with a debt-to-GDP ratio of over 200%, but even they aren't going to default.

 

[DuskEngine]

It's not surprising. Greece is a tourism-based economy, and tourism hasn't been as much of a cash cow as usual post-2008.

There's also the fact that most of the high-value assets in Greece are owned by the church, and they're not letting them go. If the church sold off all the land and gold that it owned, it'd go a long way towards helping the situation financially. However, Godboy gotta have his bling.

My understanding is that most of the money is tied up in a few oligarchical family businesses which deal in industry and shit. What you're saying wouldn't surprise me, but where did you hear about the Orthodox Church coming into the picture?

 

[DangerousGas]

A Greek friend of mine brought it to my attention. There is info out there, but I'm posting from my phone at the moment, which makes it a PITA to find and add links.

 

[Fallensaint]

I may not be American, but the confidentiality is indefinite, correct?

And is Asia and Africa any better off? Or is the situation the exact same as it is in the western countries?

Asia and parts of Africa tend to be net exporters so, no the problem is not so bad, although certain countries in both continents are severely in the red.

 

[Holdek]

It's not surprising. Greece is a tourism-based economy, and tourism hasn't been as much of a cash cow as usual post-2008.

There's also the fact that most of the high-value assets in Greece are owned by the church, and they're not letting them go. If the church sold off all the land and gold that it owned, it'd go a long way towards helping the situation financially. However, Godboy gotta have his bling.

Tourism is important to Greece but it's less than a fifth of their economy, so it's not the Bahamas. They have a mixed economy with one of the largest shipping industries in the world. The church is a problem but really in regards to tax avoidance and sheltering by business and rich people.

 

[Fallensaint]

Tourism is important to Greece but it's less than a fifth of their economy, so it's not the Bahamas. They have a mixed economy with one of the largest shipping industries in the world. The church is a problem but really in regards to tax avoidance and sheltering by business and rich people.

Isn't one of the problems with Greece the high number of people employed in the public sector? If I recall they have the same approximate population as Belgium and yet 100* the number of public servants, it is madness.

 

[SpessCaptain]

My Ruskie friend migrated for work in Greece. Now he's back in Russia. Talk about jumping out of a frying pan and into a (possible) fire.

 

[Holdek]

Isn't one of the problems with Greece the high number of people employed in the public sector? If I recall they have the same approximate population as Belgium and yet 100* the number of public servants, it is madness.

Yeah, that's a big part of their structural problem. There are quite a few things that have to be fixed which is a big reason it's been in crises for so long.

 

[DangerousGas]

Tourism is important to Greece but it's less than a fifth of their economy, so it's not the Bahamas. They have a mixed economy with one of the largest shipping industries in the world. The church is a problem but really in regards to tax avoidance and sheltering by business and rich people.

Fair point about the tourism aspect of their economy: I wasn't aware that Greece's shipping and mining concerns were quite so significant. Regarding the church though: they're worse than the catholic church for hoarding high-value assets while ranting about the importance of charity.

I honestly think that Tsipras could probably pull together a lot of the money that Greece needs if he had five years and the will to root out as many kickbacks and shady deals as possible though; the level of corruption in Greece is, I'm told, staggering.

 

[Arkangel]

Hopefully Zeus will come down from Olympus and banish away the debt with his lightning bolts.

 

[SpessCaptain]

Hopefully Zeus will come down from Olympus and banish away the debt with his lightning bolts.

Or Aphrodite sperm sea foam cash from the castrated ballsack of Uranus on a sea shell

 

[DangerousGas]

Seriously, where the fuck is Plutus when you need him?

 

[DuskEngine]

Greece's finance minister managed TF2's hat economy for a few months, so you know he's qualified.

Greece will reissue the drachma pegged to the value of the Unusual Ghastly Gibus, calling it now.

 

[JU 199]

The analysis is lengthy but completly wrong. 1/10 for effort. Greece's debt do not matter as a figure. Europe could pay all of it for Greece without affecting their credit rating. The only reason it matters it's because it's a template for Italy, Portugal and Spain. Paying it's debt would send a very bad message. No one owns Greek debt but the central bank and the IMF. Even Greek banks do not own greek debt.

I disagree. Greece's debt may be comparatively small compared to the united states or china, but it's not the amount that matters, it's about who's holding it and whether they know they're holding it or not. Because the debt was used to create opaque financial instruments, it's hard to tell who's holding the parcel of cyanide. Plus, several Italian, Spanish and American banks re-leveraged their exposure Greek debt during 2013-2015.

Your are right about the E.U never directly paying their debt off because of the bad precedent, although that's only half of it. Some member are ideologically opposed to it too. I should have mentioned that.

Greece will default at some point or another, or will get his debt forgiven because Greece keep borrowing to the people that already own much more that they can pay. Europe central bank is loaning money to Greece so it can pay back previous loans.

Greek already defaulted to the IMF (even if some are too skittish to admit it). The troika are also against forgiving any Greek debt, even when it's own reports say it's necessary.

 

[Takayuki Yagami]

Russia is Greece's biggest source of imports. It gets the majority of its gas from them.

Ah, ok. I'm an idiot.

 

[PantsOfDesire]

I disagree. Greece's debt may be comparatively small compared to the united states or china, but it's not the amount that matters, it's about who's holding it and whether they know they're holding it or not. Because the debt was used to create opaque financial instruments, it's hard to tell who's holding the parcel of cyanide. Plus, several Italian, Spanish and American banks re-leveraged their exposure Greek debt during 2013-2015.

Your are right about the E.U never directly paying their debt off because of the bad precedent, although that's only half of it. Some member are ideologically opposed to it too. I should have mentioned that.




Greek already defaulted to the IMF (even if some are too skittish to admit it). The troika are also against forgiving any Greek debt, even when it's own reports say it's necessary.

I think politically it'd be very difficult to forgive Greek debt. Right now the perception is that Greece has been fiddling its books for years and that they don't want to have to deal with the consequences of this. The unilateral decision to hold a referendum at incredibly short notice didn't help, and the Greek call for continued negotiations made no sense. Why would the EU and IMF continue negotiations when anything agreed could in a week be swept away by popular vote? Tsipras must have known this would happen or he's amazingly incompetent. It's shenanigans like this that further sour attitudes towards Greece. Add this to the pain many of us have experienced as a result of austerity and necessary reforms, so why would there be much sympathy for Greece? Had negotiations been successful, then maybe further down the line there could be discussions around forgiveness of some debt. The Greek debt is not sustainable in any real sense, so something has to be done.

The problem is that the Greek government has made it difficult for EU leaders to even consider the idea and seem to have forgotten that Tsipras isn't the only one with voters to please. Just look at Ireland, where for years I've a front-row seat as businesses folded and beggars increased in number. Enda Kenny, the current Taoiseach (prime minister), is pretty popular despite presiding over increased taxes and reduced services. Granted he had the advantage of succeeding a government that is widely credited with having fucked-up beyond all belief. I think perception of Kenny is helped by the recovery we've seen, which helps make the austerity measures seem more like necessary medicine than punishment. It's difficult to see how he could maintain popular support if he were to then support anything to suggest that Greece was going to get off easy. It really doesn't help that the Greeks government seems to be playing a game of brinksmanship. They seem unaware that bailing out Greece may be more damaging to the credibility of the EU than it would be to allow them to fail and depart.

 

[AnOminous]

I think politically it'd be very difficult to forgive Greek debt. Right now the perception is that Greece has been fiddling its books for years and that they don't want to have to deal with the consequences of this. The unilateral decision to hold a referendum at incredibly short notice didn't help, and the Greek call for continued negotiations made no sense.

Holding a referendum on a highly technical issue that most of the voters won't even understand is the height of irresponsibility.

It is basically trolling and it is no wonder that the IMF blew them off.

I'm not exactly a fan of the IMF, but this is some bullshit. Giving in to Greek demands would just open the floodgates to more attempts to weasel out of debt by other countries that have not to date tried such a tactic.

I think the IMF is as much to blame for this as Greece, and has a long-standing policy of extending loans conditioned on governments (often corrupt and incompetent) implementing horrible policies, but however you address that, this is clearly not the way.

Basically handing Greece a windfall for bad behavior would create a huge moral hazard. Other countries would follow suit.

Not that I'm an expert on this or anything, but I don't think it takes Milton Friedman or Keynes to see that this shit is fucked up.