Greek money pit swallows another Eur120bn

Rochdale_Pioneers

I can't quite believe this story. They've already burned 120bn and now they're being given the same again. So countries in deep financial difficulties like Ireland Spain and Portugal are going to "lend" even more cash they can't afford to a country who will throw it on the bonfire and say "more please".

Greece has gone. When it defaults it will cost Europe this kind of amount anyway - they'd have been better pulling the plug and getting on with it.

Generali

The longer this goes on, the bigger the mess when they do default.

Wookster

It really does beggar belief. If ever there was an example of throwing goo money after bad, this is it.

Time to throw the Greeks to the dogs.

ManAtHome

Maybe they need the cash to kick-start/lock-in the recovery...

On a more serious note - not yet the done-deal that all the newsfeeds seem to be reporting. Old Finanace Bod proposed austerity measures which weren't passed by parliament, so they appointed New Finance Bod who went to Brussels to get A Better Deal. NFB appears to have just nodded through a worse deal (extra 3 or 4 billion euro in cuts) which has yet to be agreed by parliament.

Anyhoo, whether The Deal is voted through or not, little or no progress was made on last years conditions, so probably just another can-kick until the bankstas can transfer even more dross to the taxpayers via their various Central Banks .

shortchanged_2

Unfortunately Greece looks like a lost cause. I just hope the Europeans markets are preparing themselves as best they can when it all eventually goes pop.
How much bailing out can Germany actually afford before it starts to bring Europes biggest economy down with it.

Generali

AIUI, the premise is that the longer default can be held off, the more time the banks have to get their balance sheets in order.

Keep interest rates low to enable banks to make bumper profits at our expense and use those profits to shore up the reserves so that losses can be absorbed.

Basically you are going to bail out Greece via your mortgage and credit card bills and savings accounts.

kaya

so you loan somebody some money so they can get their business going again, they mess up big time and dont make the money back you have lent them, do you just write of the amount you have loaned them and resign yourself to never getting it back or do you lend them some more in the hope they can make back the original amount you have paid them? Not an easy dilemma from anybodies perspective, at least this way there is hope, if you just write off the first debt you replace that hope with a big financial hole , i dont think there is a right or wrong answer, its not like you can send in the bailiffs to them and reposess their cars and homes ,and lets not forget we have "phil the greek" parading around as a member of the royal family

Generali

kaya wrote: »

so you loan somebody some money so they can get their business going again, they mess up big time and dont make the money back you have lent them, do you just write of the amount you have loaned them and resign yourself to never getting it back or do you lend them some more in the hope they can make back the original amount you have paid them? Not an easy dilemma from anybodies perspective, at least this way there is hope, if you just write off the first debt you replace that hope with a big financial hole , i dont think there is a right or wrong answer, its not like you can send in the bailiffs to them and reposess their cars and homes ,and lets not forget we have "phil the greek" parading around as a member of the royal family

AIUI, the only country to have paid off a debt remotely this big was the UK in the late C18th/early C19th when the empire was expanding rapidly. Apart from that it's all default.

Greece is insolvent. Bond buyers won't buy their bonds except at very high interest rates. The only people dumb enough to lend to them are Governments using taxpayers (ie other peoples') money.

Rochdale_Pioneers

Considering that theu have already devoured 120bn I just cannot understand what the EU governments are thinking. Is the failure of the Euro something that must be avoided at *any* cost? Even if that cost is your own economy collapsing?

When this crash started off the guilty parties were the banks. They had issued debt, repackaged and sold it, then insured it and sold and resold that - a spiders web where everyone owed money to everyone and once the cash vanished it collapsed. It seems to a layperson like me that the governments are repeating this same error on a larger scale. The amount of money owed by most European states to other European states is already in the hundreds of billions. The chances of Greece paying the money it owes to Spain so that Spain can pay the money it owes to Italy so Italy can pay the money it owes to Ireland is already remote, and yet here we are with these bankrupt countries lending even more money to another even more bankrupt country.

Yes I know that national debt is completely unlike personal debt, but in this case Greece has turned into the legendary money pit. Greece has an economy in freefall unable to raise the taxes needed to pay its bills. So it cuts spending thus deepening the economic crash thus increasing its bills thus increasing the amount it needs to borrow. Punters aren't stupid enough to lend the cash without impossible interest rates and caveats. So Greece needs to grow its economy 30% to repay these "loans" despite yet another round of austerity cuts demanded by the lending nations collapsing its economy still further.

Finally even the cretins at the ratings agencies have woken up and declared anything Greece does as an effective default - if you put money in you won't get it back. And yet the EU powers that be throw another 120bn - which they themselves will have to borrow some at punitive rates of interest - into the Greek pit knowing with utter certainty that the money will disappear as quickly as the last 120bn.

What does this action change? Will the Greeks suddenly balance their economy and start growing fast enough to afford the 30% in 2 years interest charges? No! So either it defaults and yet more money is lost, or they continue to keep throwing 120bn at a time down the hole and then it defaults. I know a default is scary as is the breakup of the enlarged Eurozone, but its going to happen anyway so why burn money you don't need to? As you know I dislike call-me-Dave, but well done him for negotiating Britain out of this madness.

movilogo

I just cannot understand what the EU governments are thinking. Is the failure of the Euro something that must be avoided at *any* cost? Even if that cost is your own economy collapsing?

Yes because they believe dying with everyone else is preferable than dying alone

If Euro collapses (or in the verge of collapse), then lack of market confidence means nations around the world will not want to deal with €. That will deliver a massive blow to Eurozone and will accelerate complete failure of the currency. Strong economies like Germany will get out of it but PIGS (portugal, ireland, greece, spain) etc. will be in deep cowdung.

I'm just worried what symbol will replace € in my keyboard once it collapses

purch

Is the failure of the Euro something that must be avoided at *any* cost?

Yes.

The EUR experiment HAD to happen whatever the cost.

It cannot be allowed to fail.