Greek Financial Crisis Thread

[Hydesland]

Otherwise Greece might get hyperinflation in the EU, Germany too. Once you start the fall, stopping it is not easy.

That's definitely not going to happen, QE is not that powerful. Secondly, that graph is somewhat capturing the significant strengthening of the dollar over 2014/15.

[Novus America]

Otherwise Greece might get hyperinflation in the EU, Germany too. Once you start the fall, stopping it is not easy.

That's definitely not going to happen, QE is not that powerful. Secondly, that graph is somewhat capturing the significant strengthening of the dollar over 2014/15.

Again how low? It is already lower than on that graph, 1.10 USD and falling.

Well you have to consider investor confidence. Plus this whole Greek thing. The Euro is dropping at the same time the EU is going into unknown territory. I agree hyperinflation is unlikely (unless Greece starts printing too many Euros or other countries follow). Still the Eurozone is sailing into dangerous unknownn waters, without being based on a true banking union.

I am beginning to wonder if this might be the beginning of the end.

[Arkolon]

RIP Greece

[Novus America]

RIP Greece

The death will not be a peaceful one. The disaster is just beginning. I am interested to see what happens when everything opens tomorrow.

Though we can carve the headstone.

[New Werpland]

Do you think things will get better for Greece and Europe in the future?

[Arkolon]

The Eurogroup just needs to wait about a week before properly setting up negotiations again. By then, Greek banks would be fully out of cash and would be on the verge of collapse, bringing Syriza to its knees, faced with an even worse choice: austerity (and harsher than before) or Grexit. Watch closely as the predictions of everyone in this thread-- but that one Marxist fellow-- come true.

[Natapoc]

The Eurogroup just needs to wait about a week before properly setting up negotiations again. By then, Greek banks would be fully out of cash and would be on the verge of collapse, bringing Syriza to its knees, faced with an even worse choice: austerity (and harsher than before) or Grexit. Watch closely as the predictions of everyone in this thread-- but that one Marxist fellow-- come true.

That seems to have been the intent of some in Europe (To cause the greek people pain until they did what the bankers told them), but it looks like Greece may be able to simply print more euros for the banks.

If the creditors won't be reasonable this seems like a great option.

[Arkolon]

The Eurogroup just needs to wait about a week before properly setting up negotiations again. By then, Greek banks would be fully out of cash and would be on the verge of collapse, bringing Syriza to its knees, faced with an even worse choice: austerity (and harsher than before) or Grexit. Watch closely as the predictions of everyone in this thread-- but that one Marxist fellow-- come true.

That seems to have been the intent of some in Europe (To cause the greek people pain until they did what the bankers told them), but it looks like Greece may be able to simply print more euros for the banks.

If the creditors won't be reasonable this seems like a great option.

What makes you think Greece can print more Euros?

[Natapoc]

That seems to have been the intent of some in Europe (To cause the greek people pain until they did what the bankers told them), but it looks like Greece may be able to simply print more euros for the banks.

If the creditors won't be reasonable this seems like a great option.

What makes you think Greece can print more Euros?

From the previous page, it seems greece may have a legal way to print enough notes to keep its banking system working thus unraveling the plan to blackmail greece into accepting austerity by ruining their economy by means of restricting access to cash.

What the hell do they use for money in the meantime?

Varoufakis is apparently suggesting they basically put out IOUs;

Top Syriza officials say they are considering drastic steps to boost liquidity and shore up the banking system, should the ECB refuse to give the country enough breathing room for a fresh talks.

"If necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago," said Yanis Varoufakis, the finance minister.

California issued temporary coupons to pay bills to contractors when liquidity seized up after the Lehman crisis in 2008. Mr Varoufakis insists that this is not be a prelude to Grexit but a legal action within the inviolable sanctity of monetary union.

Mr Varoufakis and ministers will hold an emergency meeting tonight with the private banks and the governor of the Greek central bank, Yannis Stournaras, to decide what to do before the cash reserves of the four big lenders dry up tomorrow.

Louka Katseli, head of the Hellenic bank Association, said ATM machines will run out of money within hours of the vote. One official say that Eurobank was "flat out of money" late on Sunday, even though Greek depositors have been limited to €60 a day since capital controls were imposed a week ago.

Or, even more weirdly, they could apparently start printing out as many euros as they need;

Syriza sources say the Greek ministry of finance is examining options to take direct control of the banking system if need be rather than accept a draconian seizure of depositor savings - reportedly a 'bail-in' above a threshhold of €8,000 - and to prevent any banks being shut down on the orders of the ECB.

Government officials recognize that this would lead to an unprecedented rift with the EU authorities. But Syriza's attitude at this stage is that their only defence against a hegemonic power is to fight guerrilla warfare.

Hardliners within the party - though not Mr Varoufakis - are demanding the head of governor Stournaras, a holdover appointee from the past conservative government.

They want a new team installed, one that is willing to draw on the central bank's secret reserves, and to take the provocative step in extremis of creating euros.

"The first thing we must do is take away the keys to his office. We have to restore stability to the system, with or without the help of the ECB. We have the capacity to print €20 notes," said one.

Such action would require invoking national emergency powers - by decree - and "requisitioning" the Bank of Greece for several months. Officials say these steps would have to be accompanied by an appeal to the European Court: both to assert legality under crisis provisions of the Lisbon Treaty, and to sue the ECB for alleged "dereliction" of its treaty duty to maintain financial stability.

Mr Tsakalotos told the Telegraph that the creditors will find themselves be in a morally indefensible position if they refuse to listen to the voice of the Greek people, especially since the International Monetary Fund last week validated Syriza's core claim that Greece's debt cannot be repaid.

"It would be a pretty extreme position for Europe to say that the vote didn't matter. That is not what they did when Ireland voted 'No' to the Lisbon treaty," he said.

[Arkolon]

Either of those things are clear preludes to a forceful Grexit. Issuing IOUs is tantamount to the idea that Greece starts its own 'New Drachma' as legal tender alongside the Euro, and printing more Euros is a surefire way to get the ECB to kick Greece out. Without negotiations, Greece will fall to pieces in the coming days. For example, the very second the ECB blocks all emergency funds for Greek banks, the IOUs become the only useful currency in Greece... that IOU being a drachma with the word 'new' in front of it.

[Natapoc]

Either of those things are clear preludes to a forceful Grexit. Issuing IOUs is tantamount to the idea that Greece starts its own 'New Drachma' as legal tender alongside the Euro, and printing more Euros is a surefire way to get the ECB to kick Greece out. Without negotiations, Greece will fall to pieces in the coming days. For example, the very second the ECB blocks all emergency funds for Greek banks, the IOUs become the only useful currency in Greece... that IOU being a drachma with the word 'new' in front of it.

What mechanism exists for the ECB to kick Greece out of the euro in this case?

[Arkolon]

Either of those things are clear preludes to a forceful Grexit. Issuing IOUs is tantamount to the idea that Greece starts its own 'New Drachma' as legal tender alongside the Euro, and printing more Euros is a surefire way to get the ECB to kick Greece out. Without negotiations, Greece will fall to pieces in the coming days. For example, the very second the ECB blocks all emergency funds for Greek banks, the IOUs become the only useful currency in Greece... that IOU being a drachma with the word 'new' in front of it.

What mechanism exists for the ECB to kick Greece out of the euro in this case?

At this point no one's pretending the ECB is apolitical and nonpartisan anymore.

[Natapoc]

What mechanism exists for the ECB to kick Greece out of the euro in this case?

At this point no one's pretending the ECB is apolitical and nonpartisan anymore.

Please state explicitly what you are implying here regarding the mechanism that exists to remove Greece from the euro in this case.

[Arkolon]

At this point no one's pretending the ECB is apolitical and nonpartisan anymore.

Please state explicitly what you are implying here regarding the mechanism that exists to remove Greece from the euro in this case.

Greece would be kicked out if it angered the Eurozone at an alarming enough level. Whether it pisses off the ECB by printing Euros it isn't supposed to or if it pisses off the Eurogroup by having Varoufakis spit in Dijsselbloem's face doesn't really matter, since all of those European entities are deeply interlinked.

[Hydesland]

At this point no one's pretending the ECB is apolitical and nonpartisan anymore.

Please state explicitly what you are implying here regarding the mechanism that exists to remove Greece from the euro in this case.

The ECB can stop supporting the banking infrastructure in Greece, causing them to eventually collapse. Greece could still be a de facto Euro user in this case, but it would be an intolerable situation and they'd likely start using a new currency instead.

[Natapoc]

Please state explicitly what you are implying here regarding the mechanism that exists to remove Greece from the euro in this case.

Greece would be kicked out if it angered the Eurozone at an alarming enough level. Whether it pisses off the ECB by printing Euros it isn't supposed to or if it pisses off the Eurogroup by having Varoufakis spit in Dijsselbloem's face doesn't really matter, since all of those European entities are deeply interlinked.

How would they go about kicking Greece out? What legal precedent would exist to do this?

[Arkolon]

Greece would be kicked out if it angered the Eurozone at an alarming enough level. Whether it pisses off the ECB by printing Euros it isn't supposed to or if it pisses off the Eurogroup by having Varoufakis spit in Dijsselbloem's face doesn't really matter, since all of those European entities are deeply interlinked.

How would they go about kicking Greece out? What legal precedent would exist to do this?

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

[Parti Ouvrier]

Either of those things are clear preludes to a forceful Grexit. Issuing IOUs is tantamount to the idea that Greece starts its own 'New Drachma' as legal tender alongside the Euro, and printing more Euros is a surefire way to get the ECB to kick Greece out. Without negotiations, Greece will fall to pieces in the coming days. For example, the very second the ECB blocks all emergency funds for Greek banks, the IOUs become the only useful currency in Greece... that IOU being a drachma with the word 'new' in front of it.

Or the third option.
http://greece.greekreporter.com/2015/07 ... -eurozone/

[Arkolon]

Either of those things are clear preludes to a forceful Grexit. Issuing IOUs is tantamount to the idea that Greece starts its own 'New Drachma' as legal tender alongside the Euro, and printing more Euros is a surefire way to get the ECB to kick Greece out. Without negotiations, Greece will fall to pieces in the coming days. For example, the very second the ECB blocks all emergency funds for Greek banks, the IOUs become the only useful currency in Greece... that IOU being a drachma with the word 'new' in front of it.

Or the third option.
http://greece.greekreporter.com/2015/07 ... -eurozone/

That's issuing IOUs.

[Natapoc]

How would they go about kicking Greece out? What legal precedent would exist to do this?

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

No I'm not denying that it's possible to remove Greece. And I'm aware there is no precedent: Which is why your confidence that something there is no precedent for will certainly happen seems odd.

I'm asking that you support your claim by giving an example of how this could legally happen. If you can't you're simply repeating political hyperbole.

So last chance: Support your argument or admit it's political hyperbole.

[Bogdanov Vishniac]

How would they go about kicking Greece out? What legal precedent would exist to do this?

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

The problem - as I understand it - is that the Lisbon Treaty doesn't have any mechanism by which member states could be ejected; they can only hypothetically leave on their own, which is in itself in pretty murky legal waters. Were it deemed necessary to get rid of Greece, the only mechanism the EU states could use is to ratchet up sanctions high enough or stop cooperating such that Greece would have no choice but to ditch the euro.

[Novus America]

Or the third option.
http://greece.greekreporter.com/2015/07 ... -eurozone/

That's issuing IOUs.

Which will be pretty much useless for imports. Her argument that there will be no purchasing powers loss for domestic purchases ignores this applies only to entirely domestic products. Of which Greece produces little.

[Natapoc]

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

The problem - as I understand it - is that the Lisbon Treaty doesn't have any mechanism by which member states could be ejected; they can only hypothetically leave on their own, which is in itself in pretty murky legal waters. Were it deemed necessary to get rid of Greece, the only mechanism the EU states could use is to ratchet up sanctions high enough or stop cooperating such that Greece would have no choice but to ditch the euro.

And if they do the last part, it would be in violation of eurozone trade agreements meaning those countries would be acting illegally against the euro.

(Not to mention, planning and coordinating that would be a nightmare and take quite a while)

[Fremont Forest]

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

The problem - as I understand it - is that the Lisbon Treaty doesn't have any mechanism by which member states could be ejected; they can only hypothetically leave on their own, which is in itself in pretty murky legal waters. Were it deemed necessary to get rid of Greece, the only mechanism the EU states could use is to ratchet up sanctions high enough or stop cooperating such that Greece would have no choice but to ditch the euro.

I don't think they'd use sanctions, rather the ECB would continue to withhold support the Greek banking system until Greece has no choice but to leave the Eurozone.

[Arkolon]

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

No I'm not denying that it's possible to remove Greece. And I'm aware there is no precedent: Which is why your confidence that something there is no precedent for will certainly happen seems odd.

I'm asking that you support your claim by giving an example of how this could legally happen. If you can't you're simply repeating political hyperbole.

So last chance: Support your argument or admit it's political hyperbole.

You're this upset because I said that Greece would be ejected if it pissed off the Eurozone enough even if you literally just admitted that it is a possibility?

I'm not sure if you've realised yet but no country has yet left the Eurozone. Pretty hard to set a legal precedent from something that would only happen for the first time. Anyway, are you denying that it is in any way possible for Greece to be removed from the Eurozone?

The problem - as I understand it - is that the Lisbon Treaty doesn't have any mechanism by which member states could be ejected; they can only hypothetically leave on their own, which is in itself in pretty murky legal waters. Were it deemed necessary to get rid of Greece, the only mechanism the EU states could use is to ratchet up sanctions high enough or stop cooperating such that Greece would have no choice but to ditch the euro.

Issuing IOUs without emergency liquidity assistance from the ECB is a way to replace the Euro with a drachma. So, if you want, while the Euro would remain as legal tender, Greece would then be a Eurozone member in name only. Which is tantamount to leaving it, if you ask me.