Greek Financial Crisis Thread

[Camelza]

By defaulting. When a nation defaults it has the ability to start over, the price it has to pay is instability and high prices in imported goods.
And yes, all nations take loans, regardless of the state of their economy.
Plus, when I meant lower taxes I was mainly referring to the VAT which is currently hurting Greek companies a lot.

Well you have to find someone willing to give you are loan first. Who is going to loan money to Greece? They cannot back it with commodities.

And what it really comes down too is can Greece navigate the inflation and stability? I guess we will find out. But since Greece is so reliant on foreign trade rising prices of imports is going to destroy the living standard. I mean we could be looking at medicine shortages and starvation. We could get Venezuela with much less oil.

See that is a very heavy price to pay. And do you really think the Greek government is up to the challenge?

Who will loan a nation? There are banks lending money to ghost companies and far more worse cases. A country is always eyed by investors, especially when said country is desperate.
Plus, there are many powers that wish for the Eurozone to be disintegrated.

Iceland let its banks default, and it didn't renege on its sovereign debt.

Which Greece cannot do. Because the EU took over the loans. Which turned out to be a very bad idea.

Why can't the Greek government let the greek private banks default?

[Liberty and Linguistics]

You know what might solve Greece's issues? Bring back the Ottoman Empire. *nods*

[Calimera II]

Iceland let its banks default, and it didn't renege on its sovereign debt.

It also, correct me if I'm wrong, had a very sharp period of inflation following the Krona's collapse.

Of course, a sharp devaluation is not an option for Greece at the moment.

I have a good icelandic friend who went back to Iceland and now lives in the capital area of iceland and he said that everything has become more expensive. But at least the economy is doing well now.

[Liberty and Linguistics]

It also, correct me if I'm wrong, had a very sharp period of inflation following the Krona's collapse.

Of course, a sharp devaluation is not an option for Greece at the moment.

I have a good icelandic friend who went back to Iceland and now lives in the capital area of iceland and he said that everything has become more expensive. But at least the economy is doing well now.

Despite this, the Pirate Party of Iceland is polling at 37% due to dissatisfaction with the economy, along with a plethora of other issues.

[Novus America]

Well you have to find someone willing to give you are loan first. Who is going to loan money to Greece? They cannot back it with commodities.

And what it really comes down too is can Greece navigate the inflation and stability? I guess we will find out. But since Greece is so reliant on foreign trade rising prices of imports is going to destroy the living standard. I mean we could be looking at medicine shortages and starvation. We could get Venezuela with much less oil.

See that is a very heavy price to pay. And do you really think the Greek government is up to the challenge?

Who will loan a nation? There are banks lending money to ghost companies and far more worse cases. A country is always eyed by investors, especially when said country is desperate.
Plus, there are many powers that wish for the Eurozone to be disintegrated.

Which Greece cannot do. Because the EU took over the loans. Which turned out to be a very bad idea.

Why can't the Greek government let the greek private banks default?

Those loans are not the type of loans you might want to take. The cost will be enormous, the terms harsh, and they will just get Greece back into bad debt.

They cannot just let the private banks default, well they can but it changes nothing because it is the EU that controls the sovereign debt, not the banks.

See defaulting on private loans was done already by Greece in 2012. That is no longer an option. They already tried a partial default and internal devaluation. Obviously it did not work.

[Pollona]

Who will loan a nation? There are banks lending money to ghost companies and far more worse cases. A country is always eyed by investors, especially when said country is desperate.

There are always investors willing to look for a profit. The trouble comes when you ask the next question: at what cost to Greece will these investors put in their money? The yields on Greek debt will not look pretty. Creditors expect there to be some cover of the financial risk in return for their investment, which means they will demand higher yields. And right now Greece looks very risky.

Interest payments for Greece will likely be very high over the next few years, whether they are in the eurozone or not.

Why can't the Greek government let the greek private banks default?

Presumably because a sovereign default and a financial crisis occurring at the same time will lead to a rift in the economic space-time continuum (exaggeration). If you want some good examples, the Latin American crises of the 80s are pretty good indicators of what Greece is in for if the sovereign default is accompanied by a banking crisis.

It also, correct me if I'm wrong, had a very sharp period of inflation following the Krona's collapse.

Of course, a sharp devaluation is not an option for Greece at the moment.

I have a good icelandic friend who went back to Iceland and now lives in the capital area of iceland and he said that everything has become more expensive. But at least the economy is doing well now.

Ah there we go, thanks. Best wishes to the people of Iceland, they took an extremely risky decision.

[Calimera II]

I have a good icelandic friend who went back to Iceland and now lives in the capital area of iceland and he said that everything has become more expensive. But at least the economy is doing well now.

Despite this, the Pirate Party of Iceland is polling at 37% due to dissatisfaction with the economy, along with a plethora of other issues.

Cost of living is high, it bothers many people. Nevertheless, I don't think it affects my friend. Her father is CEO of an icelandic company and they bought a very nice second house in an exclusive, expensive neighborhood in America.

[Camelza]

Who will loan a nation? There are banks lending money to ghost companies and far more worse cases. A country is always eyed by investors, especially when said country is desperate.

There are always investors willing to look for a profit. The trouble comes when you ask the next question: at what cost to Greece will these investors put in their money? The yields on Greek debt will not look pretty. Creditors expect there to be some cover of the financial risk in return for their investment, which means they will demand higher yields. And right now Greece looks very risky.

Interest payments for Greece will likely be very high over the next few years, whether they are in the eurozone or not.

True, but the government will have a wider variety of investors, other than the EU, the ECB and the Euro-members if we leave the Eurozone.

Why can't the Greek government let the greek private banks default?

Presumably because a sovereign default and a financial crisis occurring at the same time will lead to a rift in the economic space-time continuum (exaggeration). If you want some good examples, the Latin American crises of the 80s are pretty good indicators of what Greece is in for if the sovereign default is accompanied by a banking crisis.

What we've been through these five years as a society doesn't really makes such scenaria scary. Plus, we're not a latin American country, so it is really not comparable.
Pherhaps it would be better if a quick end was put into this, rather than prolonge a painful coma.

[Pollona]

There are always investors willing to look for a profit. The trouble comes when you ask the next question: at what cost to Greece will these investors put in their money? The yields on Greek debt will not look pretty. Creditors expect there to be some cover of the financial risk in return for their investment, which means they will demand higher yields. And right now Greece looks very risky.

Interest payments for Greece will likely be very high over the next few years, whether they are in the eurozone or not.

True, but the government will have a wider variety of investors, other than the EU, the ECB and the Euro-members if we leave the Eurozone.

Even if the government has a wider variety of investors, they will all be on the private markets again. They won't be as willing to throw money away so impulsively like the ECB or the EU. Until creditors can be assured Greek debts can be paid, they will likely demand very high yields for whatever Greece puts on the market. You just have to take a look at Greece's long-term interest rates (which inched past 20% at the height of the crisis) to wince at the kind of pain the country will be in for.

It's nice to be optimistic, but in reality it will be a very long road to fiscal solvency. Even with more private investors.

What we've been through these five years as a society doesn't really makes such scenaria scary. Plus, we're not a latin American country, so it is really not comparable.
Pherhaps it would be better if a quick end was put into this, rather than prolonge a painful coma.

It's sobering to think that after everything that has happened to Greece, another crisis is "but another flesh wound" so to speak. I don't agree or disagree with you, but it is a sobering thought none the less. A sharp quick end to this entire ordeal would have been better than a prolonged, dragged out crisis. But everyone is partially at fault for this dragging on.

[Chestaan]

Help crowdfund the next Greek bailout...

[Geilinor]

SYRIZA needs to put on their big boy pants, and compromise with the EU to reach a reform deal. In an ideal world, such a deal could involve electoral reform, privatizations, and tax/public service cuts. However, this will not happen in any multiverse, and the idea of a Grexit seems likely. Greece exiting the Eurozone won;t be hellish provided Greece has a competent government that is willing to make tough decisions.

*Looks at SYRIZA*

Oh, wait, Greece does not have such a government. In January, everyone was cheering for SYRIZA on NSG. My trademark pessimism and cynicism didn't fail me.

Some people were cheering for Syriza, the rest of us recognized that there was a reason people were voting that way - the other parties had already screwed them over.

[DBJ]

Syriza has no interest in pushing economic reforms. Even if the EU and syriza came to an agreement, given that syriza is ideologially opposed to market friendly reform, they wouldn't be a very effective parter in implementing those reforms. You can't expect someone to do a good job at implement reforms he's believes are destructive.

[White Anglo Saxon Protestant America]

See this is why Socialism fails.

[Gauthier]

This is why the Taxes Are Theft mentality fails.

[Republic of the Cristo]

Truly, if Greece were to leave the Euro zone, and revert to a silver standard in the Drachma, then we may see the necessary stepping stones for recovery.

That and they would need to start cracking down on people not paying their taxes.

[New Werpland]

SYRIZA needs to put on their big boy pants, and compromise with the EU to reach a reform deal. In an ideal world, such a deal could involve electoral reform, privatizations, and tax/public service cuts. However, this will not happen in any multiverse, and the idea of a Grexit seems likely. Greece exiting the Eurozone won;t be hellish provided Greece has a competent government that is willing to make tough decisions.

*Looks at SYRIZA*

Oh, wait, Greece does not have such a government. In January, everyone was cheering for SYRIZA on NSG. My trademark pessimism and cynicism didn't fail me.

Some people were cheering for Syriza, the rest of us recognized that there was a reason people were voting that way - the other parties had already screwed them over.

Populists don't achieve anything, it's never a good idea to vote their way.

[Skeckoa]

Truly, if Greece were to leave the Euro zone, and revert to a silver standard in the Drachma, then we may see the necessary stepping stones for recovery.

That and they would need to start cracking down on people not paying their taxes.

Or on the whole bloated government lavish spending thing that went on for years. Gladly the country has seemed to be going through with those cuts. Just a decade or two too late.

[Liberty and Linguistics]

This is why the Taxes Are Theft mentality fails.

Uh. Taxes have been raised. A lot.

[Pollona]

Unless there is some last minute miracle at play, it looks like Greece will default on their €1.6 Billion due to the IMF. Technically they will just be "in arrears" and "behind on their loan" but it will have the same effect. The IMF is unlikely to release any further funding to Greece after they miss the loan payment tomorrow. If they don't pay back the IMF they certainly won't be able to pay back the ECB on the 20th.

This is going to compound and compound fast.

[White Anglo Saxon Protestant America]

Unless there is some last minute miracle at play, it looks like Greece will default on their €1.6 Billion due to the IMF. Technically they will just be "in arrears" and "behind on their loan" but it will have the same effect. The IMF is unlikely to release any further funding to Greece after they miss the loan payment tomorrow. If they don't pay back the IMF they certainly won't be able to pay back the ECB on the 20th.

This is going to compound and compound fast.

In other words Greece is fucked.

[Page]

I don't blame SYRIZA. They're only reacting to unacceptable austerity measures which have been forced on Greece for years. In an ideal world each side makes a concession and reaches a compromise that keeps the economy afloat. But, the EU sees itself as having leverage (which they do) and in turn they demand way too much. Empowering SYRIZA was the only choice left to the Greek people under such circumstances.

[Ardoki]

The Greek government should have cracked down on tax evasion as soon as it started (i.e. a long long time ago). If it did, Greece wouldn't be in the mess it is today.

[Republic of the Cristo]

The Greek government should have cracked down on tax evasion as soon as it started (i.e. a long long time ago). If it did, Greece wouldn't be in the mess it is today.

Well, income wasn't their problem. It was spending that was their problem. But getting the extra tax revenue wouldn't hurt.

[White Anglo Saxon Protestant America]

The Greek government should have cracked down on tax evasion as soon as it started (i.e. a long long time ago). If it did, Greece wouldn't be in the mess it is today.

They should have also cut spending and quit spending their loans on welfare.

[The Qeiiam Galaxy]

This is why the Taxes Are Theft mentality fails.

Uh. Taxes have been raised. A lot.

And tax evasion is still a major problem. I assume that is what Gauthier meant with "Taxes are theft-mentality".