Have the Greeks Actually DONE Anything to Address Their Deficit?

ILW

tomterm8 wrote: »

Yes, I believe people have mentioned that option.

It hasn't worked out very well, has it? After twenty months and three massive budget cuts they just announced they have as large a deficit as when they started the project. And no one will loan them money on the markets.

Iceland, who just defaulted and made no attempt to repay their debt, on the other hand, has had the IMF leave town declaring the entire thing a great success. And they are borrowing money on the markets.

It appears they have proposed budget cuts, but put little into action.

tomterm8

ILW wrote: »

It appears they have proposed budget cuts, but put little into action.

I think you will find they have put them into action.

But they haven't worked.

And never were going to, really.

EDIT: just to clarify this, if Greece were to eliminate every single public expenditure, that is the entire government were to shut down, AND if greece refused to pay out on every pension agreement it made, it would still be running a deficit, and it would still be insolvent.

ILW

So if you take interest out of the equation, where is the money going, or are they still failing to collect taxes.

tomterm8

ILW wrote: »

So if you take interest out of the equation, where is the money going, or are they still failing to collect taxes.

The 16.5% unemployment can't help.

Nor can the fact that they have had three years of steady recession. To put this in perspective, they have already had a recession worse than any after the war.

Their entire economy is, to put it mildly, absolutely scagged.

Governments tend to take on contracts based upon the predicted GDP. At the rate its going, any cuts to budgets done over the last 20 months have been more than outweighed by the falls to GDP.

Edit: the traditional remedy for this would be a devaluation of around 25%, and inflation of around 5%, as well as printing money to fund our bonds for a period. In other words, the policies that Britain has utilized directly after the credit crunch. We are running a worse deficit than Greece, have a worse banking sector than greece... but we screwed our creditors.

ILW

At some point thay will have to accept that they have a third world economy and will have to adjust their lifestyle to fit. That is unless the German public are prepared to keep on paying for the Greeks to have a higher standard of living than many germans. History tells us where that sort of thing leads.

purch

There is nothing they can do about it

Yep.

Default has been priced in for ages, so the only Q is how "much do you want off the top?"

The best thing the greeks can do is tell everyone to f*ck off

I think that's what they are saying, but it a slightly more polite way.

pqrdef

Nobody will be credit-worthy if default becomes the easy option.

tomterm8

pqrdef wrote: »

Nobody will be credit-worthy if default becomes the easy option.

Bankruptcy is part of the law of any civilised country for a good reason. It is to stop people being forced to sell themselves into slavery.

No one is talking about default being an easy option, but it is a completely necessary option in this case.

Let me repeat:
It is not possible, under any realistic circumstances, for Greece not to default. The only option other than default is for non-greek taxpayers to bail them out. That means you and I.

ILW

tomterm8 wrote: »

Bankruptcy is part of the law of any civilised country for a good reason. It is to stop people being forced to sell themselves into slavery.

No one is talking about default being an easy option, but it is a completely necessary option in this case.

Let me repeat:
It is not possible, under any realistic circumstances, for Greece not to default. The only option other than default is for non-greek taxpayers to bail them out. That means you and I.

That appears to be what is happening.

Loughton_Monkey

tomterm8 wrote: »

Let me repeat:
It is not possible, under any realistic circumstances, for Greece not to default. The only option other than default is for non-greek taxpayers to bail them out. That means you and I.

I agree with the analysis, but hopefully not too much of you and I because we didn't get into euro-bed with them.

But surely this is new territory. Any country with its own currency would simply default, be unable to borrow another dime, and then be forced either to (a) starve, or (b) put their house in order and emerge solvent some years later.

I just don't understand how they can do this if they continue to use the Euro. It's no different from bailing out your spouse. It will cost you, and he'she may mend their ways. You might bail out just a fraction more when progress is being made. But if (like Greece) there is no abatement in the spending/debts, then divorce it ultimately the only option.

Full marks to anyone who can work out how you 'divorce' from the Euro in a practical way. It could only be done with the most meticulous border/exchange controls. But even then, any Greek with money would simply slip legally into Italy, with all Euro's intact, and slide back into Greece long in the future if ever appropriate to do so - and be even more wealthy.

Show me any Greek with >€250,000 which is not invested outside of Greece [Italian, German, or French banks] and I will show you a complete idiot.