Greece debt farce - the end of the Euro?

W

WeLuvIbiza

Active Member
Ok, maybe a touch dramatic, but it does raise the question of what exactly are the benefits of the Euro?

There is no alternative than to give more funds to Greece otherwise another banking disaster is guaranteed and far worse than before.

If Greece decides to pull out of the Euro, they are virtually writing off a huge tranche of their debt, must be a very tempting option for them at this moment.

What a bleeding mess, views?
 
Good time to buy Greek bonds. Cheap as chips and it's doubtful they'll be allowed to default.

That said, the demonstrations and political foot-dragging in Greece lead one to believe that they don't really quite understand what a mess they're in.
 
Somebody needs to go in and slap the ECB very hard and tell them to wake up!

huge sums of cash are been pumped into Greece just so that they can come back out again to pay the Bondholders.

Its unsustainable what they are doing. The ECB has to realise that Bondholders will have to take some of the pain and write down the debts.

For the euro to survive they will have to discount the bondholders and print more cash like the US Treasury has done. The European Banks need to be recapitalised but only after the huge debt mountain has been delt with and that means losses for the big Bondholders who have been protected by the ECB up to this date.

The French and German banks are up to their necks in debt invested in Pension funds tied into property. This is where the real danger lies. Billions of French and German workers will loose all their pension funds if the euro collapses.

I hope the Greeks teach them a lesson and vote it down, as then the ECB will have to bite the bullet and deal with the fundamental issues, but I dont think they will. The austerity budget will go through and the whole rotten apple will survive until the next crisis hits.
 
The Greek economy could be allowed to fail and leave the Euro. In the short term it would hurt and shake confidence, but in the long term it could be better for both? If you look at countries across the EU, they will have to take measures to decrease debt and social outlays. The countries have to make their own choices. The danger that collapse the Euro would be the failure of Spain's economy. The Portugal economy is one that bears watching.
 
Morbyd, I coud really write for hours explaining to you why the Greeks want to kick out the IMF.

But all i'm going to say, is that you have no idea about the measures they're taking against the people here. What is happening at the moment is all about rescuing the banks and not the people.
 
dancemaster said:
But all i'm going to say, is that you have no idea about the measures they're taking against the people here. What is happening at the moment is all about rescuing the banks and not the people.
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Correct.

Its disgusting what they are doing to the people in Greece....and getting away with it. Slums are now starting to emerge in Athens and where are the media????

the whole Federal Europe danger is coming down the line and if people dont wake up to what is happening it may be too late.
 
dancemaster said:
Morbyd, I coud really write for hours explaining to you why the Greeks want to kick out the IMF.

But all i'm going to say, is that you have no idea about the measures they're taking against the people here. What is happening at the moment is all about rescuing the banks and not the people.
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Fair enough, mate. You're there on the ground. We just see what's on the news.

There's plenty of blame to go around, of course, but the worst I've seen is the stories about how Goldman Sachs helped the government borrow money and hide it prior to the recession... and then shorted their debt! Bunch of snakes.
 
Morbyd said:
Fair enough, mate. You're there on the ground. We just see what's on the news.

There's plenty of blame to go around, of course, but the worst I've seen is the stories about how Goldman Sachs helped the government borrow money and hide it prior to the recession... and then shorted their debt! Bunch of snakes.
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Exactly it's the politics who did that and of course the european governments knew from the start about this but did nothing to stop it. And now we see the result...
 
dancemaster said:
Exactly it's the politics who did that and of course the european governments knew from the start about this but did nothing to stop it. And now we see the result...
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The politicians cooked the books on real debt percentage, but Greece was not the only country that did this. The EU is complicit in this also by not enforcing the debt ceiling earlier.
 
The basic fundamental flaw in the whole debt problem is that big the Bondholders who lent the money are not being asked to share the same pain that ordinary people have to endure. Protect the boys in the club at all costs. And what a club it is. A person can invest millions in the knowledge that all their profits will be privatised and all their losses socialised....Happy Days!

Thats why the Greek people are so angry. The Austerity package that they are being forced to accept is still protecting the people who avoid paying any tax at all.

In Ireland its a similar situation. People are now commonly referred to as "Taxpayers" not citizens or individuals. We are all just a number, a figure at the end of a balance sheet that is either an asset or a liability.
 
Bez said:
The basic fundamental flaw in the whole debt problem is that big the Bondholders who lent the money are not being asked to share the same pain that ordinary people have to endure. Protect the boys in the club at all costs. And what a club it is. A person can invest millions in the knowledge that all their profits will be privatised and all their losses socialised....Happy Days!

Thats why the Greek people are so angry. The Austerity package that they are being forced to accept is still protecting the people who avoid paying any tax at all.

In Ireland its a similar situation. People are now commonly referred to as "Taxpayers" not citizens or individuals. We are all just a number, a figure at the end of a balance sheet that is either an asset or a liability.
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I agree with your point, but there are pension funds tied into the bonds along with the fat cats. This could mean people would lose their pensions and have to work for the rest of their lives. This would create a bigger disaster for the economies involved. The bond holders should take some loss but the ramifications of a total loss would crush alot of people.
 
I can't see how they can not default in the end, or technically default by restructuring.

The debt is E350B and the tax take is E40b (or similar)?!:eek:

All the plans seem to involve lend them more and hope recovery comes. It wont, not for a decade.

It may in the long term teach people a lesson. Everyone has been happy to claim their 8% coupon or whatever the interest is on their debt however no one is prepared to take the resulting possible 'haircut' that the high rate reflects. Moral hazards all over the place and no risk investments mean no one assesses the risks properly.

Greece should never have been let in to the Euro, if you have a crazy crackhead relative you dont give him your wallet & expect to have no come back.

More I see of how exposed and interwined we all are, that no one who could do anything about it (i.e the banks) has learned and no one has the power to prevent it happening again (only perhaps the banks themsevles...and as if), the more I think - if I may call it this - Robders dooms day scenario may come to pass.
 
djjaycool said:
The EU is complicit in this also by not enforcing the debt ceiling earlier.
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Not necessarily true. Greece & Goldman disguised much of the borrowing with currency swaps and didn't disclose what they were doing to the ECB.

Dancemeister is correct in that politicians and bankers are to blame, but...

djjaycool said:
I agree with your point, but there are pension funds tied into the bonds along with the fat cats. This could mean people would lose their pensions and have to work for the rest of their lives. This would create a bigger disaster for the economies involved. The bond holders should take some loss but the ramifications of a total loss would crush alot of people.
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This is another very good point. It's not always big fatcats who invest in bonds. It's normal people, pension funds, etc. Easy to paint them all as rich folk who deserve to get shafted but that's too easy.

And the effect of default is not only on the bondholders but on the country itself. Future borrowing will be expensive, and it's the citizens that will pay for that. Normally currency would be devalued but the Euro makes this all more complicated.
 
It can be saved. But the bad debt and losses have to be taken out of the system or else it will collapse. Quarantine it and deal with it over a much longer period of time. I am not saying the Bondholders should take big losses but debt for equity is an option.

Then recapatilise the banks with either loans from the IMF or print money like the Americans, and allow the markets to lend again. The markets know whats going on and they wont be fit for purpose until the rot is taken out of the system.

Problem is, that unlike America where the state controls the Treasury to a certain degree nobody can tell the ECB what to do. Its a private German bank and it will do what Banks do best.....protect its own vested interests first and to hell with everybody else.
 
The financial industry needs more regulation. The derivative market is what caused the majority of the bank crisis. The industry was unregulated and the majority of the debt was unsecured ie it took 2 euro to buy a 100 euro of debt. The problem was with the failure of the derivatives the 98 euro of debt was spread to alot of different places. This was what caused the original financial crisis. The spill over effects have not been fully felt yet. If you ask most economist they won't agree on what and how derivatives work. They were nothing more than a debt buying scheme that when the economy is going good is great but when the economy tanks you are left holding the bag.
 
Bez said:
Problem is, that unlike America where the state controls the Treasury to a certain degree nobody can tell the ECB what to do. Its a private German bank and it will do what Banks do best.....protect its own vested interests first and to hell with everybody else.
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Totally correct about ECB. As far as America and its economy are concerned, the problems they've been through so far are really small compared to what is coming...
 
dancemaster said:
Totally correct about ECB. As far as America and its economy are concerned, the problems they've been through so far are really small compared to what is coming...
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The USA economy was in worse shape during the 80's. The debt is worrying but with control of the central bank and treasury you can spend your way out of trouble. The debt will be reigned in and a balanced budget will happen next year which will reduce the deficit.
 
djjaycool said:
The USA economy was in worse shape during the 80's. The debt is worrying but with control of the central bank and treasury you can spend your way out of trouble. The debt will be reigned in and a balanced budget will happen next year which will reduce the deficit.
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You don't think the US markets are going to fall off the edge of the earth when the QE plug is pulled?

The way in which the prices of precious metals have been manipulated by J P Morgan et al, is just indicative of how much corruption exists in the seedy world of finance, quite sickening.
 
WeLuvIbiza said:
You don't think the US markets are going to fall off the edge of the earth when the QE plug is pulled?

The way in which the prices of precious metals have been manipulated by J P Morgan et al, is just indicative of how much corruption exists in the seedy world of finance, quite sickening.
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The markets are intertwined the world shares as much USA debt as the USA does. It is a case of you will lend more money to make sure you will get paid later. The USA still has the world largest economy and the world needs a trading partner. The debt will come back under control as it did in the 1980's. The Russian economist Kondratiev predicted wave in economies, this is the trough of a wave. The 2 wars will end which will relieve the pressure on the debt. The devaluation of the dollar is a good thing for the American economy and trade balance. The USA will sell more good over seas and already some jobs that were outsourced are coming back to the USA.
 
dancemaster said:
Totally correct about ECB. As far as America and its economy are concerned, the problems they've been through so far are really small compared to what is coming...
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What do you think is coming.... how bad do you reckon it will get
 
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