Who Will Lend Them the Money?

Alan_the_skinflint

pqrdef wrote: »

The point of bailing a country out is to avoid a default and protect its credit. For Greece, it's too late now, it's defaulted already. It can now default on the bailout money and its debt servicing costs will be reduced to almost nothing, so it should be able to manage. It's got nothing to lose by telling the troika where to go.

Um... er... not *really* quite correct! If they could de-value their currency then they'd have a better chance... I can see the headlines now "The Death of the Euro (again...)"

I believe IMF and ECB are insisting on austerity measures before lending. So where does this leave any new government who has been voted in on a no more austerity promise?

In a moral dilemma! But they are politicians, morality has little chance.

ffacoffipawb

ILW wrote: »

I believe IMF and ECB are insisting on austerity measures before lending. So where does this leave any new government who has been voted in on a no more austerity promise?

In Poo Bay with no paddle.

Mr_Mumble

Greece: European taxpayers drew the short straw...

Of Greece’s 266 billion euros of debt, about 194 billion euros, or 73 percent, is held by the European Central Bank, euro-area governments and the IMF, according to the Greek Debt Management Office in Athens.

Wouldn't worry about France at the moment. Politicians say a lot of populist stuff on the campaign trail to get votes but day-to-day they're now dealing with the technocrats and if that line is breached the creditors usually keep the government in line. France going Greek is still highly unlikely imho.

Generali

ILW wrote: »

Fair point, what about Greece though?

Greece is borrowing from 'The Troika', that is the IMF, the European Commission. The Greeks can vote for whoever they like but they cannot insist that The Troika or anyone else lends them more money.

pqrdef

Mr_Mumble wrote: »

Of Greece’s 266 billion euros of debt, about 194 billion euros, or 73 percent, is held by the European Central Bank, euro-area governments and the IMF

I doubt if the Greek rioter-in-the-street is losing any sleep over how they're going to service that. He's already been shafted by the troika and he doesn't think he owes it anything.

And at the end of the day, if you've got no trade barriers and a common currency, the only way to counteract an ongoing trade deficit is to move funds back the other way. If the Germans sell the Greeks more than the Greeks can afford, it can only end with the Germans giving the Greeks the money to buy the goods, one way or another.

grizzly1911

pqrdef wrote: »

I doubt if the Greek rioter-in-the-street is losing any sleep over how they're going to service that. He's already been shafted by the troika and he doesn't think he owes it anything.

And at the end of the day, if you've got no trade barriers and a common currency, the only way to counteract an ongoing trade deficit is to move funds back the other way. If the Germans sell the Greeks more than the Greeks can afford, it can only end with the Germans giving the Greeks the money to buy the goods, one way or another.

Once they default and fall out of the euro I am sure their will be some grouping willing to start lending again at a price either in interest or in kind.

They still have their national utilities to sell, not much different to the UK 20/30 years ago, to keep things afloat. At least what they can sell is virtually free - sunshine.

tomterm8

ILW wrote: »

Would anyone in their right mind lend to Greece, knowing they have already defaulted and are likely to again?

It will work out much the same way as it did here: the government will change the law so it is illegal to use your right mind. It is called financial repression and it is the reason that Japan has been able to borrow huge amounts more than it could ever repay.

Remember, soverign countries are barely bound by law.