If Greece does go Bust?

ILW

If they were to go bust, in the time until setting up a new currency etc, would they wages to civil servants, police etc , and stuff like state pensions just stopped being paid?

If not where would the money be coming from?

AndyGuil

ILW wrote: »

If they were to go bust, in the time until setting up a new currency etc, would they wages to civil servants, police etc , and stuff like state pensions just stopped being paid?

If not where would the money be coming from?

They print it because no one will lend to them. Mass inflation.

ILW

AndyGuil wrote: »

They print it because no one will lend to them. Mass inflation.

I would have thought that even that would take a few months to get sorted. Would the printers actually take on the job with no guarantee of getting paid?

Graham_Devon

Would the IMF not help them out? (I'm kinda feeling thats a stupid question?!)

AndyGuil

ILW wrote: »

I would have thought that even that would take a few months to get sorted. Would the printers actually take on the job with no guarantee of getting paid?

The UK normally does the money printing for other countries. They won't print in advance because the news will get out, instead it is likely they will over print the existing money to show that it is Greek. This means a few months until the Drachma takes over.

Wookster

Listened to something on Radio 4 which said it would be an estimated 4 months (if really accelerated hard) to get new currency notes in place.

There is the option of stamping all existing euro notes with a non-removable 'GREECE' stamp and using those in the intervening period.

The more serious risk is the risk of contagion - not contagion in the sense that other government will decide to pull out but that there would be a slow motion bank run (by citizens & corporates) on Portuguese/ Spanish/ Italian banks which enormously magnifies the banking crisis. Without a formal lender of last resort the implications of this are very serious.

Jegersmart

It is complicated for sure, I am keeping an eye on other government yields and the Portuguese looks !!!!!! and has done for a couple of months.....Greece *will* default sooner or later imho which is why I am looking at the possible "nexts"......I think Portugal will need to at least restructure their debt within 6 months unless yields drop by 50%....

all imho

J

tomterm8

ILW wrote: »

If they were to go bust, in the time until setting up a new currency etc, would they wages to civil servants, police etc , and stuff like state pensions just stopped being paid?

If not where would the money be coming from?

It would be the same as, say, when Argentina went bust. People would no longer sell goods to the greek government on credit, but the nature of soverign governments is they will stiff the existing debt holders, and still receive enough taxation income to pay the really necessary bills.

Greece would go over to Cash On Delivery for a time.

CRASH_BANG_WALLOP

Harry Rednapps dogs will help them out

IronWolf

Surely Greece still holds a vast supply of notes from before the Euro, even Germany has its DM on standby.

It would be a bit silly to tie yourself into a currency and not retain a backup.

Mallotum_X

IronWolf wrote: »

Surely Greece still holds a vast supply of notes from before the Euro, even Germany has its DM on standby.

Germany has lots of DM sat in a warehouse ready to go? Really? any source for that?

How did argentina deal with it last time? Presumably people in Greece will just keep using Euro notes and not accept any new currency?