Greece...

Thrugelmir

globalds wrote: »

Oh well looks like no Grexit

Appears if there's a lack of unity in the EU's ranks. As nothing appears to have been resolved. Seems if the dream of a Federal Europe outweighs reality. Rather like the SNP and Scottish Independence.

ManAtHome

globalds wrote: »

I couldn't link to the FT article refereed to in my previous post ..But IMF seem to be asking for a debt write off ...So it really does look like free money for the Greeks.

Yes but the IMF is asking for a Euroland debt write-off so Greece will be able to pay the IMF!

FT article via GreekReporter http://greece.greekreporter.com/2015/05/05/ft-imf-threatens-to-hold-back-aid-to-greece-if-eurozone-doesnt-write-off-part-of-debt/

wymondham

Bored with this now... someone wake me up when a decision is made...

princeofpounds

The IMF story was false.


Greece is very simple. Everyone knows that it can't pay back its debts, but the real debate is between a hostile restructuring of that debt and a negotiated restructuring of that debt (in the form of lower debt service costs rather than lower debt principal - economically it's the same thing).


Given more than half of Greece's debt is owned by European institutions, who have already slashed the cost of funding well below market levels and could slash it further, Greece's debts can easily be made sustainable within a negotiated framework. Greece has a similar interest burden to the rest of the periphery like Portugal and Italy.


In return for this, Europe is asking for some pretty basic reforms. So basic in fact that it's hard to understand why Greece is so opposed to cutting the waste. But I guess it's a matter of where your expectations start from, and it feels more painful after a 15-20% economic contraction. And there is always a loss of pride in being dictated to, even if the demands are for your own good.


The irony of the whole situation is that Greece has already torched about 2.5% of GDP by taking the confrontational approach, more than they could possibly gain by asking for concessions.


Very pyrrhic approach, and they probably won't even get to pretend it's a victory.

Generali

princeofpounds wrote: »

The IMF story was false.


Greece is very simple. Everyone knows that it can't pay back its debts, but the real debate is between a hostile restructuring of that debt and a negotiated restructuring of that debt (in the form of lower debt service costs rather than lower debt principal - economically it's the same thing).


Given more than half of Greece's debt is owned by European institutions, who have already slashed the cost of funding well below market levels and could slash it further, Greece's debts can easily be made sustainable within a negotiated framework. Greece has a similar interest burden to the rest of the periphery like Portugal and Italy.


In return for this, Europe is asking for some pretty basic reforms. So basic in fact that it's hard to understand why Greece is so opposed to cutting the waste. But I guess it's a matter of where your expectations start from, and it feels more painful after a 15-20% economic contraction. And there is always a loss of pride in being dictated to, even if the demands are for your own good.


The irony of the whole situation is that Greece has already torched about 2.5% of GDP by taking the confrontational approach, more than they could possibly gain by asking for concessions.


Very pyrrhic approach, and they probably won't even get to pretend it's a victory.

As far as I can see it boils down to a very simple couple of choices:

1. Who runs Greece: the Greeks or The Troika?
2. If the Greeks want to go back to running Greece, how much pain are the Troika prepared to inflict and are the Greeks prepared to accept that pain.

It looks to me like the ECB has set things up quite nicely so that they can make the entire Greek banking system insolvent overnight (literally overnight for technical reasons). In return of course, the Bank of Greece has the right to print Euro banknotes. If they wanted to do so they could cause chaos by simply flooding the Euro system with huge amounts of cash.

The current plan seems to be that the IMF nicely asks the Greeks to partially default to the ECB so they can keep up their payments to the IMF. That's rather like AMEX telling you to pay their credit card bill rather than the Visa one.

Oh and to complicate matters further, the Greeks are now running a deficit again, even ignoring the interest bill and the last time I looked, longer dated Greek debt was yielding 27%. That was a couple of weeks back so it wouldn't surprise me if yields are a sight higher now.

Fun, fun, fun.

vivatifosi

Re the story about tax being charged on cashpoint withdrawals. Anecdotally, I read a week or so back on the overseas travel board that someone was finding it really hard to use cards to pay in Greece and that the storeholders and restauranteurs wanted cash for everything.

Has anyone else heard or experienced similar?

antrobus

Generali wrote: »

....It looks to me like the ECB has set things up quite nicely so that they can make the entire Greek banking system insolvent overnight (literally overnight for technical reasons). In return of course, the Bank of Greece has the right to print Euro banknotes. If they wanted to do so they could cause chaos by simply flooding the Euro system with huge amounts of cash....

Article 106 - The ECB shall have the exclusive right to authorise the issue of banknotes within the Community.

The National Central Banks of course, issue Euro notes under ECB authorisation. I have managed to establish that the Bank of Greece does have a printing works that prints Euro notes, and whilst it does not have the 'right' to print Euro notes willy-nilly, it has the physical capability of doing so.

However I imagine that certain things might happen to Greece if it committed such a gross violation of an EU Treaty. Not getting it's annual €5bn bung from the EU would be one of them, I'd have thought.

http://www.ibiblio.org/theeuro/InformationWebsite.htm?http://www.ibiblio.org/theeuro/bnk.printcode.htm

michaels

Pah - What's 5bn Euros in grants when you can prnt enough EUR notes to buy the whole of Germany?

antrobus

vivatifosi wrote: »

Re the story about tax being charged on cashpoint withdrawals. Anecdotally, I read a week or so back on the overseas travel board that someone was finding it really hard to use cards to pay in Greece and that the storeholders and restauranteurs wanted cash for everything.

Has anyone else heard or experienced similar?

That's funny, because the Greek tourism chief, one Andreas Andreadis, has been pleading for tourists to use their credit cards wherever possible to help combat tax evasion. Whilst the Greek PM has even floated the idea of making the use of credit cards mandatory for transactions over €70.

(There might be unintended consequences for that particular idea. After all, if I'm a trader, and I know I'm going to get fined for carrying out a +€70 in cash, then it's 100% certain I'm going to keep that hidden.:))

http://www.theguardian.com/world/2015/may/02/greece-tourists-credit-cards-tax-evasion

antrobus

michaels wrote: »

Pah - What's 5bn Euros in grants when you can prnt enough EUR notes to buy the whole of Germany?

You can apparently tell from the print code where a Euro note has been printed. Presumably, if it came to it, people wouldbe scrutinising the code, and rejecting those with the Greek 'N' code.

I suppose the Greeks could start printing Euro notes with false print codes to get around that difficulty. But that would be forgery on an epic scale.