Greece default.

ILW

A week ago it was said that if Greece defaulted on it's debt it would bring down the whole European economy.

It has now been decided that if it only defaults 50% of its debt then the problem is solved.

I cannot understand the logic.

nearlynew

ILW wrote: »

A week ago it was said that if Greece defaulted on it's debt it would bring down the whole European economy.

It has now been decided that if it only defaults 50% of its debt then the problem is solved.

I cannot understand the logic.

That's because there is no logic.

Just denial, spin and bullsh1t.

michaels

I can't understand how come if Greece only pays back 50c on the Euro its debt only falls from 160% of GDP to 120%. Especially as anything over 100% would appear to be unsustainable?

Mallotum_X

michaels wrote: »

I can't understand how come if Greece only pays back 50c on the Euro its debt only falls from 160% of GDP to 120%. Especially as anything over 100% would appear to be unsustainable?

I dont think the default is 50% of all debt, but certain bank debt only.

JonnyBravo

Mallotum_X wrote: »

I dont think the default is 50% of all debt, but certain bank debt only.

Absolutely. My mate Spiridon owes me £50 and I'm not letting him off any of it.

CLAPTON

firsly nothing has actually been agreed with the banks that lent the money; the agreement is to ASK them to agree a 50% haircut
nothing has been agreed about recapitalising the banks; only the asperation to do so
nothing has been agree about the trillion bail out fund except to a ask/suggest Barzil and China to lend some money and some dodgy leverage of the fund (i.e. insuraing some % of some debts and not others)

the actual problem of what to do about Greece and Italy hasn't been discussed at all
Greece and Italy need to leave the euro to allow them to balance their budget and to make their goods and services competitive

so far it's all been about politics (mainly German) and not sadly about economics or the welfare of the people of the countries

MacMickster

Mallotum_X wrote: »

I dont think the default is 50% of all debt, but certain bank debt only.

Quite right. This is only the first stage of a Greek default. Their remaining debt is still unmanageable. All they have done is to build a bit of extra road down which the can can be kicked, whilst plans are made for what will become a federal Europe.

Mr_Mumble

Mallotum_X wrote: »

I dont think the default is 50% of all debt, but certain bank debt only.

Yep, the 'official' sector i.e. IMF, EU and ECB don't lose any money whereas private sector lose 50% if they 'voluntarily' agree to a default.

Hence why debt is only reduced to 120% of GDP (by 2020 if the projections are correct and they never are!).

michaels

And that 120% is sustainable how?

Edit: And how much of that IMF money is lent by the UK?

tartanterra

A Eurofudge.

A total Greek default is being drawn out, but it will still happen.
As for the 50% haircut, well, the banks that need to swallow this haven't agreed to it yet.

Buying time to try and save other countries (Spain and Italy) from the same fate, that's all.

ILW

So what happens if only some of the banks agree to the haircut. Will the others get paid in full?