Greece...

ILW

I am probably being thick here, but is it possible for any party to walk away from austerity whilst still staying the in the Euro?

Wookster

ILW wrote: »

I am probably being thick here, but is it possible for any party to walk away from austerity whilst still staying the in the Euro?

Yes it is, however those receiving bailouts are reliant on the bailout mechanism for continuing funding therefore if they breach terms of the bailout or renege on it, funding stops.

The only two points stopping non bailout countries from complying with austerity requirements are signup to the fiscal pact & the extent to which markets will actually lend to them.

ILW

Wookster wrote: »

Yes it is, however those receiving bailouts are reliant on the bailout mechanism for continuing funding therefore if they breach terms of the bailout or renege on it, funding stops.

.

I believe Greece would be running a defecit even without loan repayments. Surely that means if the funding dried up they would be even worse off than under the current austerity measures?

Conrad

Is it not the case that if they devalued to the Drachma, Greek holidays would be very competitive and provide a quick stream of much needed cash? For the average Greek on the ground, is this not a better scenario than years of austerity? Would it not give immediate light at the end of the tunnel for the man in the street?

ILW

Conrad wrote: »

Is it not the case that if they devalued to the Drachma, Greek holidays would be very competitive and provide a quick stream of much needed cash? For the average Greek on the ground, is this not a better scenario than years of austerity? Would it not give immediate light at the end of the tunnel for the man in the street?

The polls all seem to suggest that the "man in the street" wants to stay with the Euro though.

pqrdef

ILW wrote: »

The polls all seem to suggest that the "man in the street" wants to stay with the Euro though.

He knows that the drachma would be wallpaper money. If forced to accept drachmas by an employer or a customer, the only thing to do with them would be to change them into euros as fast as possible.

ash28

pqrdef wrote: »

He knows that the drachma would be wallpaper money. If forced to accept drachmas by an employer or a customer, the only thing to do with them would be to change them into euros as fast as possible.

I think you're probably right - if Greece reverted to the Drachma all government employees and pensions would automatically be paid in Drachmas - which I imagine would devalue pretty quickly from it's starting point.

The problem would be - what would happen to people's money already in the banks and held in Euros - would their Euros remain Euros or would they be converted at the starting rate to Drachmas? Probably wiping out most of their money. A la Argentina when the government changed peoples foreign currency holdings to the peso in the early 2000s. Would the gov't set limits on withdrawing or moving money out of the country until the changeover happened - will people start to withdraw their money and keep it under the mattress?

Government debt would still be in Euros - so would multiply and make it virtually unpayable.

Not pretty.

I think the Greeks would be in an awful state for a few years but would be better off in the long run. The country would eventually become more competitive. And perhaps people would want to invest. It would certainly do wonders for the tourist industry.

Anyway I'm on my hols and just thinking out loud - heard no news for a while now - the US isn't renowned for it's international news coverage.

The_J

Greece would be destroyed and it's no less than those thieving socialists deserve. I've never seen such a bone idle, hand in pocket, tax averse, morally corrupt nation in all my life. The fact that they were allowed into the Euro should mean life sentences for the Goldman Sachs et al execs who lied to get it done.

Then again, if it does bring the Euro down maybe they should get knighthoods.

worldtraveller

The_J wrote: »

Greece would be destroyed and it's no less than those thieving socialists deserve. I've never seen such a bone idle, hand in pocket, tax averse, morally corrupt nation in all my life. The fact that they were allowed into the Euro should mean life sentences for the Goldman Sachs et al execs who lied to get it done.

Then again, if it does bring the Euro down maybe they should get knighthoods.

Nice post! :T

pqrdef

The_J wrote: »

Greece would be destroyed and it's no less than those thieving socialists deserve. I've never seen such a bone idle, hand in pocket, tax averse, morally corrupt nation in all my life.

Well that's all right then, doesn't matter what happens so long as blame is correctly assigned. And if Britain gets dragged down as well, well we deserve it too.