Will Greece default, and if so will the Euro collapse?

jimmymelrose

The Greek Prime Minister's decision to hold a referendum has really put the cat amongst the pigeons. I'm no expert on these matters but to me it looks very grim indeed. This decision seems to be akin to unplugging the plug (last week's bailout solutions) on a sinking ship. I was wondering if other Lifers have any insights into this worrying situation.

LargeAddick

For what it's worth the Greek PM is taking a big gamble BUT I reckon it will pay off with a very narrow victory in the referendum. However if not who knows what will happen. An expert on BBC news just now from Tulletts said that if the Greeks withdrew from the Euro then expect to see Portugal, Spain and even France to follow suit. Hope that helps !!!!

Weegie Addick

Aren't they deciding it's better to go bankrupt rather than stay in the Euro?  this could have v big conesequences -  not that I understand much of it!

Mendonca In Asdas

Will Greece default 

Thats the million dollar question , but its probably a trillion dollar question by now.

Weegie Addick

So can anyone tell us what happens if/ when a country goes bankrupt?

LargeAddick

No, but we may soon find out !!

Ormiston_Addick

For what it's worth the Greek PM is taking a big gamble BUT I reckon it will pay off with a very narrow victory in the referendum. However if not who knows what will happen. An expert on BBC news just now from Tulletts said that if the Greeks withdrew from the Euro then expect to see Portugal, Spain and even France to follow suit. Hope that helps !!!!

France? WTF is he talking about! Portugal and Spain are possibilities but France withdrawing is unthinkable.

The most likely outcome is that the Germans will now be able to insist to the Eurozone that there must be a uniform monetary policy to avoid another Greek tragedy.

The Greeks should never have been allowed into the Euro in the first place, they only got in because the dodgy bastards cooked the books!

CAFCsayer

It's possible that if Greece pull out, people from other countries who come under the "PIGS" category (Portugal, Italy and Spain) will become worried about the saftey of their money in banks, withdrawing it and putting it into foreign banks; which could be calamitous, causing their banks to colapse and economies to crumble; which could lead to the colapse of the Euro. Of course there's so many 'coulds' in this; as noone really knows what will happen.

ISawLeaburnScore

The referendum move is utterly farcical. The Greek PM should be ashamed.

Leroy Ambrose

The Euro is a sick joke. Germany have been propping up Southern Europe (Greece, Portugal, Spain, Italy) for years. Christ alone knows how they've put up with it for as long as they have - must be a collective national guilty conscience about past transgressions or something.

The Euro needs to go - the sooner the better. No amount of triage can save it now - and the longer it goes on on life support, the more painful the inevitable end will be when the collapse comes. It was always an absolute bloody nonsense anyway - a unified multinational currency without unified economic & social policy across the corresponding nations is the stupidest concept ever dreamed up.

I suspect the referendum will either be too close to call, or just squeak past. That won't give the Greek PM anything like a solid mandate for implementing the cutbacks and policy changes the EU wants - and the only way out would seem to be Greek elections. He's taking a calculated gamble to try and postpone his own downfall. It doesn't matter two shits whether the referendum is passed or not. The bailout fund as announced last week was far too small to make a realistic difference anyway.

So can anyone tell us what happens if/ when a country goes bankrupt?

Sure. They can't service their debt, then the IMF steps in and gives them the equivalent of Ocean Finance's debt restructuring on a grand scale. For recent examples of so-called 'intelligent' economies that quickly became 'f***ed' economies, see Argentina and Iceland.

None of this matters in the slightest in the long term anyway. The next global recession will take numerous countries down with it - including the UK. When everyone else is bankrupt, 'bankruptcy' becomes a pretty relative concept ). The worst thing of all this is that the West is looking to China as the model of economic productivity to lead everyone out of the mire - and praising them for how efficient they are. The sad thing is, the reason they're so 'efficient' is that they have a native workforce of about a billion slaves.

Best not to think too much about it at all really )

Off_it

Isn't he just playing one last throw of the dice though? They're f**ked. They know they are. So do they roll over and take it "Greek style" or try and save a bit of face as they go down fighting. I think it's the end game for them now, politically - there's nothing else to lose.

*By the way, I know f all about it and have had a few sherberts tonight.

BigRedEvil

Greece has defaulted already, everyone knows it but they won't say it.

It's all a mess, every measure they've put in place has just been kicking the can further down the road (everyone's favourite term for it)

Off_it

Best not to think too much about it at all really )

What Leroy said!

Weegie Addick

You've just confirmed my worst fears, Leroy - thanks! ;-)

Off_it

Best go to France for your holidays then Weegie.

;o)

Algarveaddick

Who do they ("We" in Portugal, I guess) owe all this money to?

Jints

Who do they ("We" in Portugal, I guess) owe all this money to?

The prople/institutions/countries who bought the bonds you issued.

[quote]anyone tell us what happens if/ when a country goes bankrupt?[/quote]

 

They can't pay interest on or redeem the bonds they issued. Nobody lends them any money any more. The effect of this depends on the country. Arentina defaulted in 1999 and went through an awful slump for 3 years but is doing very well indeed now. Greece can't really default unless they get out of the Euro. They are running a primary deficit (i.e. they are still spending more money than they are getting in receipts even if you don't take account of interest payments and bond redemptions). If they are out of the Euro they can devalue their currency. One of teh problems is that there is apparently no mechanism for leaving theEuro.

 

SoundAsa£

I've got a couple of thousand or so Euros tucked away for business trips to Europe, for example I'm doing an exhibition in Frankfurt in February. I was wondering should I cash them in for Sterling?

Not a really big deal but I was wondering if any of you have (or are about to) exchange any Euros you may have knocking around?

Granpa

I wonder whether the Greek PM is trying a bluff in order to increase the rescue package ? Looking at the behaviour of the people, it seems that they have grown to feel that they have a divine right to have a relaxed attitude to life. Perhaps the problem is, that in common I guess with most Nations, a large percentage of the population is not sufficiently informed to be able to make an intelligent decision. In this Country we have millions of people who seem only ever to vote for one Party, despite the changing circumstances that occur. At the age of 74 I have voted for all of the main Parties plus Ukip when I judged them to be worth my vote at sometime. I suspect that the Greeks are about to dig themselves a big hole, into which others might fall. As my old Gran might have said, they have been out in the Sun too long.

McBobbin

I read something about benford's law on the excellent badscience website... I won't go into detail but basically if you have a spread of numbers over several magnitude (say economic figures from a country) and just take the fist digit of each number, there are statistical reasons why there are more 1s than 2s and 2s than 3s etc. When that isnt borne out, there be fraud. Someone ran all the European economic figures through a computer and looked at deviation from banford's law, and hey presto, Greece had totally cooked their books. They were the worst, but not the only country to do so.

I think that we are all doomed. Time to fill the freezer with bread, get some tinned food in and nail a door against my wall at 30 degrees methinks.

Jints

Agree that the Greeks have got away with having a dysfunctional system for years. Hardly anyone paying taxes, civil servants dong other jobs, early retirement etc etc.

The real problem is that even making huge cuts (and they are), it's never enough because the economy is shrinking so much and so quickly. They are in a vicuous circle.i

tangoflash

I'm considering doing a Peter Risdale and buying the country for a pound (or maybe even a euro), stripping all its assets before walking away with a pocket full of cash.

The problem is: What assets does Greece have worth selling?

Anyone wanting a nice Acropolis for their back garden then give me a whisper. ;-)

MrOneLung

Yes

No

 

I cannot see the Euro collapsing, and if Greece tried to leave it the country it would be in an even worse state. You cant just leave, you have to set up mechanism for changing everything over. If they were to revert to Drachma they would have to print notes,mint coins etc and they would have to have an initial fixed exchange rate. That rate would leave the public seriously out of pocket, unless they moved their euros into a bank abroad, thus weakening the country/currency even further. Same would happen if they tried to have a 2 tiered euro, you would find money leaving the country at an extortionate rate.

Friend Or Defoe

Best not to think too much about it at all really )

What Leroy said!

That's been my plan since day 1. What's on the horizon will make the current recession look like a scratched knee.

Dippenhall

Heard an expert talking and saying that it was always known this sort of financial crisis would happen and when it did the only solution to stopping it happening again would be to turn the Eurozone into a single country.  It was no secret that Greece did a deal with Goldman Sachs to hide the Greece debt  with artificial swap instruments.  The eurocrats didn't care if a weak country was brought in because if it failed it would bring forward their agenda for a State of Europe so they went along with the pretence that Greece met the standards, it was a win win for them.  A conspiracy theory I'm prepared to believe. 

Henry Irving

United States of Europe

adamtheaddick

McLovin

It's shocking what they've done.  I read through the austerity measures and one is that state pensions over €1000 per month will be cut for people under 65.  So people, in a country with the lowest taxes in europe, with the lowest tax collection rates, are merrily retiring 10 years earlier than they are here and getting paid several times what they do here.  Basically they've got a wonderful, but unsustainable system funded on debt that they could never pay.  I don't doubt that things will be terrible for them for a long time, but it's entirely their fault.

Goonerhater

They have already "de-faulted"  they cant pay back even with a 50% reduction in what they owe. Their debt (even with 50% off) is still 120% of GDP. 

Rizzo

A referendum is total bollocks. There's probably a handful of people in
the entire country who are actually qualifed to venture an opinion on
this hugely complex matter. The public simply cannot be expected to
understand what has happened and what the consequences are of accepting
or refusing the bailout.

It's like asking the man in the street whether the acquisition of a non-zero vacuum expectation value spontaneously breaks electroweak gauge symmetry. Unless that man happens to be Stephen Hawking you really can't expect him to have an informed opinion. 

Chirpy Red

 It's like asking the man in the street whether the acquisition of a non-zero vacuum expectation value spontaneously breaks electroweak gauge symmetry. Unless that man happens to be Stephen Hawking you really can't expect him to have an informed opinion. 

But I'd bet there are a few on here who would have one!