Greece...

Froggitt

michaels wrote: »

It is only unsustainable if you are also trying to service a debt of 200% of GDP.

If the UK had seen a fall of 25% in GDP I suspect persuading pensioners to accept a 25% cut in their state pension, including defined benefit public sector pensions, would be a tricky political sell.

Greek governments shouldn't promise spending that they cant afford. I'm not surprised Germans don't like the sound of Greeks retiring on an 80% pension in their fifties, while they work till they are almost 70.

purch

ChiefGrasscutter wrote: »

given back RMB in change which no one then wanted:

Bit like when you are in Scotland and you pay in "proper" pounds and they give you back some toilet paper with BoS/RBS/Clydesdale on it :eek:

princeofpounds

Really? How much is it costing the countries that are providing the money - doesn't Germany have negative yields on most of its shorter bonds? So even if Greece is only being charged a couple of percent someone is still making a nice profit bearing in mind the capital is effectively lost already...

Given Greece is higher risk, as proved by the interest charged on its market-traded debt, Germany is taking a huge loss on their lending.


For a similar risk, Germany could be investing that money in far more profitable ventures (about 8x more profitable in fact).


That is a huge opportunity cost - opportunity costs are fundamental to how finance works. It might not be cash out of the door but it's a very real cost, because you are forgoing cash coming in.


To think that the spread between German Bonds and the Eurosystem funding to Greece represents a real economic profit is financially illiterate.

Effectively Greece are paying say 8bn Euros a year so both parties can pretend that eventually the 200bn EUR will be repaid. The creditors get 8bn a year out of the deal, what does Greece get out of it?

Yes, the fact that the debt pile will be repaid on economic terms is a fiction, and we all know that; that was why the restructuring was approved in the first place.


What Greece gets out of it is pretty simple. They get to not default. Given a default would imply capital controls, a further depression, probably euro exit, collapse in living standards as they move to paying for imports in drachma, and force reforms anyway on the back of lower tax receipts, it's not something to be sniffed at.


Plus, think of the reverse situation of the German position above. Every Euro that Germany lends Greece at 1.5% can be used to buy back Greek market debt trading at 12.5%. Pretty nifty profit for the Greeks actually, in terms of costs saved.


Edit to add: sorry I hadn't checked. Greek debt now trading at 30% thanks to their genius for financial management. Makes that German money look ever-more generous.

mystic_trev

Alex Tsipras waves goodbye to any Greek bailout saying 'he has other things to attend to'

michaels

mystic_trev wrote: »

Alex Tsipras waves goodbye to any Greek bailout saying 'he has other things to attend to'

He has certainly got his priorities right

michaels

...bearing in mind the capital is effectively lost already...

princeofpounds wrote: »

Given Greece is higher risk, as proved by the interest charged on its market-traded debt, Germany is taking a huge loss on their lending.


For a similar risk, Germany could be investing that money in far more profitable ventures (about 8x more profitable in fact).


That is a huge opportunity cost - opportunity costs are fundamental to how finance works. It might not be cash out of the door but it's a very real cost, because you are forgoing cash coming in.

But my point was that no capital is at risk because it is lost already thus any interest earned is pure profit

mystic_trev

michaels wrote: »

He has certainly got his priorities right

She could be his Sister? Alexi Tight trousers

carslet

Greece will have to leave the Euro and and then the others will think about it being the best thing for them too.

Thrugelmir

carslet wrote: »

Greece will have to leave the Euro

Not if there's a willingness for a political fudge.

padington

Does a full on grexit mean a stampede for more Uk property or will it be a drag on prices ?

Libertas on HPC ( the only HPC forumite that's ever seemingly managed to grow bull horns over there and not get banned ) reckons its going to put a rocket up the London housing market.

Thoughts on this electronic post card please.