Greece...

antrobus

Generali wrote: »

...1. Default on the debt...

That's the easy bit.

Generali wrote: »

...2. Go to the Paris Club to agree a reasonable level of default (probably pay back ~50% of the debt)....

The Paris Club simply provides a forum for negotiations with creditors, i.e. the exact same people that Greece is currently (not) negotiating with.

Generali wrote: »

...3. Redenominate the debt in New Drachma at a 1:1 rate....

The debt is in Euros. I doubt that one party to an agreement can unilaterally change such a material term of the agreement. Probably best to agree what currency is involved as part of the negotiations.

Generali wrote: »

....4. Let the Drachma float freely (probably drop like a stone)

The expectation appears to be that a 1:1 Drachma- Euro rate would rapidly become a 2:1 exchange rate. With that kind of depreciation you wouldn't need a haircut if it had been agreed to redenominate the debt to begin with.

Generali

antrobus wrote: »

The debt is in Euros. I doubt that one party to an agreement can unilaterally change such a material term of the agreement. Probably best to agree what currency is involved as part of the negotiations.

Debt was presumably unilaterally changed from Francs and Marks and Drachma to Euro.

That's the great thing about being a sovereign debtor, your creditors are your [lady dogs].

antrobus

Generali wrote: »

Debt was presumably unilaterally changed from Francs and Marks and Drachma to Euro.....

Not quite the same thing really, given that EMU took years to introduce, and so everybody knew what was happening.

Generali wrote: »

...That's the great thing about being a sovereign debtor, your creditors are your [lady dogs].

Depends on what law is specified. Greece had a mixture of local law and English law bonds prior to the 2012 restructuring. As far as I'm aware, the new bonds were all issued under English law.

remorseless

ChiefGrasscutter wrote: »

So you won't be going skiiing in Austria then!
Even 4*hotels have notices up - no cards for purchases below 50 euros.
In restaurants in the mountains when you buy your lunch etc you pay cash.

If I can avoid, I would avoid unless logistically impossible like on a mountain peak with no connection!
I remember skiing in Switzerland and cards were accepted... With current technology merchants have little excuse on difficulties accepting cards unless they want to avoid it for their own reason! Then again Greece has been having tax evasion problems for a while! Italy is the same, the gov I think imposed that any transaction over 30eur and the merchant is obliged to accept card payment!

BlondeHeadOn

padington wrote: »

If I'm honest, I'm rooting for the Greeks to leave just to to see what happens.

^^^ Me too!

Graham_Devon

Seems the European members of the IMF tried their best to surpress the IMF report from yesterday stating that Greece needed debt relief.

Was the US (again) who forced the release. Hence why we only knew about what they really thought yesterday when the date of the report was the 26th June.

princeofpounds

The IMF report is actually far less sensational than the way it is being reported. The IMF's position that Greece needs debt relief is not even remotely new.

The Eurozone keep refusing to give Greece a principal haircut, but they have massively and repeatedly cut the interest rate on the debt.

In net present value terms, it is essentially the same thing. Anyone claiming that the eurozone hasn't been generous doesn't realise they are charging 1.5% for about two thirds of Greece's debt which the market charges c12% for. Greece's debt burden may be high but it's debt service burden is as low as several other EU countries and has been for some years.

The IMF doesn't see it quite the same way for two reasons. One is simply the presentational aspect; debt superficially appears high. The other is that theoretically the eurozone could hike the rates as there is no alternative source of financing. But that's all rather theoretical.

As for all the large numbers of additional money the IMF talks about- that is mostly concerning refinancing of existing debt, not fresh money that needs to be injected.

Frankly the criticism in the report of Syriza's self inflicted economic crisis is also missed by many.

cepheus

European elites have betrayed their own principles: the best piece on the disaster in Greece that I've read.

http://www.interfluidity.com/v2/5965.html

lvader

Unfortunately for the Greeks they picked the wrong government. There is some sympathy for the general populous and I sense that the Eurozone, ECB and IMF would like to help but there is no way that the current Greek government can seen to win as it would send a strong signal that if you want out of austerity it's as simple as voting in a bunch of leftist crazies to do the job.

Generali

cepheus wrote: »

European elites have betrayed their own principles: the best piece on the disaster in Greece that I've read.

http://www.interfluidity.com/v2/5965.html

The main point the piece misses is that the lenders to Greece have already been bailed out and I doubt that there are many or even any individual depositors left in Greece to be bailed-in.

As a result, most of the article is nonsensical.

Apart from mostly being crap it is a great piece though. Thanks for sharing.