Greece...

antrobus

Generali wrote: »

Over the past couple of years the Government has run a 'primary surplus', i.e. it has more than been paying its own way but for the debt repayments.

http://mainlymacro.blogspot.com.au/2015/02/greece-and-primary-surpluses.html

Firstly, that's on a cash basis, so it does not tell the whole story.

Secondly, it's clear that the situation has changed in 2015. Tax revenues have been falling, the new government has back-pedalled on reform, and the government has only survived so far by not paying its suppliers, and by scooping up all the spare cash it can find in the coffers of local authorities and sundry state businesses.

Not to mention the fact that the blog you have linked to discusses the Greece's underlying primary balance, which is an entirely hypothetical number, that is only loosely connected to the actual financial position of the Greek government.

TheBlueHorse

Generali wrote: »

Who do you think 'took all this money'?

I know you think it was the banks. But, the Greeks failed to collect 85% of taxes on average, yet provided plenty of public services, employed plenty of public sector workers and massively generous benefits.


I used to live in Greece years back. The tax collector would go to businesses and be happy to be paid off a few thousand dollars to "turn the other cheek". Now there is no business to pay him off, there is no tax man coming.

Graham_Devon

So how do people think this is going to end?

Personally, I'm guessing Syrzia will cave in. I reckon they would rather sign themselves over to the EU demands than leave the EU.

Leaves a whole host of issues as to how on earth all the previous debt and now the new debt gets paid, but I don't believe Syrzia will stick around too long to have that headache.

All I know is that despite their adamant beliefs, despite everything they have tried, I don't think their beliefs will be enough to see them knowingly opt out of the EU. Seems the EU have changed the game with an apparent plan to see an exit - though it could of course be another bluff game.

I doubt Greece will escape EU rule for decades to come though if the above is the case. That would include a two finger salute to democracy and the EU taking over the running of the country further down the line.

MFW_ASAP

Greece will continue to do what it's been doing since 2008. They will agree to reform, get a payoff to keep them going a couple of years, spend it, then find themselves right back here.

It's a game the EU are happy to play along with because with each iteration, the EU is a little bit stronger and more able to withstand the impact. Eventually we'll all be out of the woods and Greece will be asked to leave the EU without impacting the other EU members to the same extent as today (which is already a lesser extent that th previous iteration).

Froggitt

Graham_Devon wrote: »

So how do people think this is going to end?

Personally, I'm guessing Syrzia will cave in. I reckon they would rather sign themselves over to the EU demands than leave the EU.

Leaves a whole host of issues as to how on earth all the previous debt and now the new debt gets paid, but I don't believe Syrzia will stick around too long to have that headache.

All I know is that despite their adamant beliefs, despite everything they have tried, I don't think their beliefs will be enough to see them knowingly opt out of the EU. Seems the EU have changed the game with an apparent plan to see an exit - though it could of course be another bluff game.

I doubt Greece will escape EU rule for decades to come though if the above is the case. That would include a two finger salute to democracy and the EU taking over the running of the country further down the line.

My view is that the above was the plan in the event of a YES vote in the reffy. The NO vote means they cant cave in. Syriza is stuffed. All the can do is face the consequences of default and say "well you voted for it".

TheBlueHorse

Exactly! They can't agree the deal (or anything worse) following the No vote.

They can


(a) agree a new deal and claim it is better than the previous one the country voted "no" to; or
(b) default and say "you voted for this, nothing to do with us Guv"

mwpt

TheBlueHorse wrote: »

Exactly! They can't agree the deal (or anything worse) following the No vote.

They can


(a) agree a new deal and claim it is better than the previous one the country voted "no" to; or
(b) default and say "you voted for this, nothing to do with us Guv"

There is no mechanism currently for removing Greece from the Euro trading block and I have my doubts a mechanism will be created. Liquidity has stopped, so that's one thing. But Greece should default, start issuing her own currency and remove all the current market distortions. I actually think they have a slightly stronger hand than some think in that there is a lot of interest from the west in keeping Greece 'in the west'. They will suffer hardship of course, that was always going to happen after the borrowing for growth track failed, but ultimately their citizens will survive, they'll almost certainly still be able to trade in the EU, and in as little as a few years things will be better.

I say all that but the huge downside for this is that some of the other nations may be tempted to follow. Perhaps we need to further the idea of a tiered membership. If you don't use the Euro, you have a second tier membership with fewer benefits.

remorseless

mwpt wrote: »

There is no mechanism currently for removing Greece from the Euro trading block and I have my doubts a mechanism will be created. Liquidity has stopped, so that's one thing. But Greece should default, start issuing her own currency and remove all the current market distortions. I actually think they have a slightly stronger hand than some think in that there is a lot of interest from the west in keeping Greece 'in the west'. They will suffer hardship of course, that was always going to happen after the borrowing for growth track failed, but ultimately their citizens will survive, they'll almost certainly still be able to trade in the EU, and in as little as a few years things will be better.

I say all that but the huge downside for this is that some of the other nations may be tempted to follow. Perhaps we need to further the idea of a tiered membership. If you don't use the Euro, you have a second tier membership with fewer benefits.

follow what? Greece way of borrowing and then defaulting? Don't think it's a lifestyle choice many EU country would look forward to.
When Argentina defaulted, lots of Argentinian migrated (or tried) back to Italy, Spain, etc. After all these years, I don't believe Argentina is the 'happening' place yet!

There's no mechanism to boot a country out, but it seems politically they can only dance around the issue till the music is over.

Greece image has been impacted (and damaged) way more than before and it'll take a long time for other member countries to trust her again... and if Germany keeps her longer, it's to Germany benefit and a very well calculated risk!

mwpt

remorseless wrote: »

follow what? Greece way of borrowing and then defaulting? Don't think it's a lifestyle choice many EU country would look forward to.
When Argentina defaulted, lots of Argentinian migrated (or tried) back to Italy, Spain, etc. After all these years, I don't believe Argentina is the 'happening' place yet!

It's a fair point about the lifestyle choice. Re Argentina, I have no specific knowledge except for an anecdote. A friend at work has an Argentinian wife. I asked him what she says about life back there and she didn't have much negative to say. It seems to be 'ok'. Countries have survived defaults.

There's no mechanism to boot a country out, but it seems politically they can only dance around the issue till the music is over.

Greece image has been impacted (and damaged) way more than before and it'll take a long time for other member countries to trust her again... and if Germany keeps her longer, it's to Germany benefit and a very well calculated risk!

The point I was making is that Greece has one major card to play, and that is default. The advantage they have (I'm just restating myself), is that I think there is a desire to keep them within the western fold, default or not. I think that is the best thing they can do.

In my statements above I'm not making a moral judgement.

remorseless

mwpt wrote: »

The point I was making is that Greece has one major card to play, and that is default. The advantage they have (I'm just restating myself), is that I think there is a desire to keep them within the western fold, default or not. I think that is the best thing they can do.

In my statements above I'm not making a moral judgement.

Maybe... I think more than being a major card is really the last resort and the worst case scenario; TBH I don't really know if defaulting from a country perspective is really that bad, if I was the citizen of a country defaulting however I think I would be worried.

Actually if anyone knows, it'd interesting to know what would happen in case of a default...