Greece...

mystic_trev

It's not looking good for Greece. The rest of the EU appear to be queuing up to tell them to meet their obligations or FO. :eek:

http://www.theguardian.com/business/live/2015/feb/16/greek-bailout-eurozone-ministers-hold-crunch-talks-live-updates

GunJack

antrobus wrote: »

Then the people who had lent the money would have to bear the loss.

But what would actually happen?

If you read around, even briefly, you can establish that there countries that are "in surplus" (Norway, Finland, etc), and pretty obviously countries tend to borrow money from entities that aren't countries.

So how come these entities have globally allowed to become so powerful? Surely it's not in the interest of humanity

The people who decided to do the deals that resulted in the money being owed.

...and isn't that a large part of the issue? Dodgy deals done in private, with no concern shown for people (who are, incidentally, not commodities)....I think it's time the Capitallist dream bubble was popped somewhat and a fairer global system was designed. /there surely must be a middle way?

CLAPTON

GunJack wrote: »

...and isn't that a large part of the issue? Dodgy deals done in private, with no concern shown for people (who are, incidentally, not commodities)....I think it's time the Capitallist dream bubble was popped somewhat and a fairer global system was designed. /there surely must be a middle way?

most of the the world has a middle way
it's a combination of free enterprise with governmental regulation and control plus state sector provision of some goods and service.

The situation in Greece doesn't say anything about the world economic model but simply that rather naive people believed the nonsense about the magic of the EU and in particular of the Euro.

Quite understandable as most of the top UK industrialist/politicians /media etc believed the same nonsense.

Greece needs to be helped to exit the euro in an orderly manner and start becoming productive again.

Sadly it's the (mainly socialist) politicians that prevent this rather that international capitalism.

michaels

mystic_trev wrote: »

It's not looking good for Greece. The rest of the EU appear to be queuing up to tell them to meet their obligations or FO. :eek:

http://www.theguardian.com/business/live/2015/feb/16/greek-bailout-eurozone-ministers-hold-crunch-talks-live-updates

All part of the negotiation. When the deal is done the Greek people will be told it is a write-off, the Germans will be told it is a restructuring and that all the debt will eventually be repaid.....

michaels

Is lending to countries in essence any different to lending to individuals. The most risky borrowers will pay a higher interest rate to compensate the lenders for the fact that some borrowers will default.

When it happens to individuals they are bankrupted and rehabilitated after a period, debtors prisons and working of indentures are a thing of the past. Is it reasonable to try and apply such strictures to a country? After all the ability of a country to repay is only the sum of the ability of its citizens to do so.

Crashy_Time

michaels wrote: »

All part of the negotiation. When the deal is done the Greek people will be told it is a write-off, the Germans will be told it is a restructuring and that all the debt will eventually be repaid.....

And you believe that any of them will believe that? It is !!!! or bust time for Greece and the EZ IMO.

Crashy_Time

michaels wrote: »

Is lending to countries in essence any different to lending to individuals. The most risky borrowers will pay a higher interest rate to compensate the lenders for the fact that some borrowers will default.

When it happens to individuals they are bankrupted and rehabilitated after a period, debtors prisons and working of indentures are a thing of the past. Is it reasonable to try and apply such strictures to a country? After all the ability of a country to repay is only the sum of the ability of its citizens to do so.

So all the risky mortgage borrowers in the UK are paying an interest rate that reflects their risk are they? When the EZ finally blows up, THEN maybe interest rates will start to reflect borrowing risk.

mystic_trev

michaels wrote: »

All part of the negotiation. When the deal is done the Greek people will be told it is a write-off, the Germans will be told it is a restructuring and that all the debt will eventually be repaid.....

I'm just getting the feeling the rest of the EU has had enough of negotiation, and want to draw a line under the Greek bailout once and for all. If they try to fudge it, it will fool nobody.

michaels

Crashy_Time wrote: »

So all the risky mortgage borrowers in the UK are paying an interest rate that reflects their risk are they? When the EZ finally blows up, THEN maybe interest rates will start to reflect borrowing risk.

Some borrowers can borrow at 1.5%, others at 5% suggesting a risk premium of 3.5% - over 1 year that 3.5% would pay for 3.5% of such borrowers to make a 100% loss to the banks (unlikely given that the property is collateral) or 14% to suffer a 25% loss. I would have thought we would have to see a huge surge in unemployment as well as a collapse in house prices before the banks lose out with such margins....

CLAPTON

michaels wrote: »

Is lending to countries in essence any different to lending to individuals. The most risky borrowers will pay a higher interest rate to compensate the lenders for the fact that some borrowers will default.

When it happens to individuals they are bankrupted and rehabilitated after a period, debtors prisons and working of indentures are a thing of the past. Is it reasonable to try and apply such strictures to a country? After all the ability of a country to repay is only the sum of the ability of its citizens to do so.

in a very real way, debts to countries are different.
in the case of Greece most of the debt is really owed to governments who can simply print the money for the write off (well, just enter a line on the leger).