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Syrzia Won!
Comments
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P.S. Shifting the debt into New Drachma won't actually change the amount outstanding unless you somehow 'fiddle' the exchange rate.
Isn't that basically the point? You say one New Drachma is worth one Euro, you electronically convert each Euro in a Greek bank to a New Drachma, and you pay all your debts in new New Drachma. Immediately you have more New Drachma per unit of productivity than you did Euros, and less option to spend them elsewhere, so each New Drachma is worth less than one Euro and you're forced to spend them with people who are putting their prices up to account for that.If you think of it as 'us' verses 'them', then it's probably your side that are the villains.0 -
vivatifosi wrote: »The excellent Philip Atticus blog has a piece on the potential impact of a Syriza victory. It splits actions into multilateral (e.g. dependent on Troika) and unilateral. It highlights that a big problem is that the promises are front end loaded.
Philip Atticus forecasts a default in May
http://www.philipatticus.com/
Please note, article was written last Friday, so before victory, and is based on manifesto promises, not anything announced since. Nevertheless his blog posts over several years have always been insightful.
He makes a fair point; the Eurozone was never constructed with any exit clause. No one ever anticipated that anyone would want to leave, or that anyone would want to throw someone out.
On the other hand, these things have a way of working themselves out in practice.0 -
He makes a fair point; the Eurozone was never constructed with any exit clause. No one ever anticipated that anyone would want to leave, or that anyone would want to throw someone out.
On the other hand, these things have a way of working themselves out in practice.
Greece should never been admitted in the first place. So was always doomed to be in a financial crisis at some point of time. Those that allowed "the fudge" to allow membership have a lot to answer for. Greece can never repay it's debts, which even now are still growing. In years gone by Countries would simply default. (Been around 200 defaults of varying degrees in the last century or so. Therefore not really that uncommon). Expect the rise in other countries of parties that hold similar views. As a game of poker. Greece holds the better hand it would appear currently.0 -
Isn't that basically the point? You say one New Drachma is worth one Euro, you electronically convert each Euro in a Greek bank to a New Drachma, and you pay all your debts in new New Drachma....
Converting the value of balances held by Greek banks isn't the issue. Converting the value of Greek sovereign debt is the issue....Immediately you have more New Drachma per unit of productivity than you did Euros, and less option to spend them elsewhere, so each New Drachma is worth less than one Euro and you're forced to spend them with people who are putting their prices up to account for that.
If you have a 1:1 conversion rate, then you have exactly the same number of New Drachmas as you did Euros. And what's a "unit of productivity" and what is it's relevance to Greek sovereign debt?
P.S. For the avoidance of doubt, I'm not denying that Greece could print a lot of New Drachmas and devalue the currency. (i.e. fiddle the exchange rate.) But then neither am I denying that the likes of the IMF can't turn around and say to Greece; 'You still owe us 40 billion Euros'.0 -
Thrugelmir wrote: »Greece should never been admitted in the first place. So was always doomed to be in a financial crisis at some point of time. Those that allowed "the fudge" to allow membership have a lot to answer for....
Many people said so at the time.Thrugelmir wrote: »... Greece can never repay it's debts,...
Apparently Greek sovereign debt is 175% of GDP. Our sovereign debt was 175% of GDP back in the early 1950s. We managed to get out of that hole, so I'm not that convinced about this "never". Although I am convinced that there are many Greeks who would prefer not to repay.Thrugelmir wrote: ».. which even now are still growing. ...
That tends to happen in situations where expenditure exceeds income.Thrugelmir wrote: »...In years gone by Countries would simply default. (Been around 200 defaults of varying degrees in the last century or so. Therefore not really that uncommon)...
Greece has previously defaulted in 1826, 1843, 1860, 1894 and 1932.
.Thrugelmir wrote: ».... Expect the rise in other countries of parties that hold similar views....
I don't doubt it. Debtors always have a tendency to want their debt to disappear.Thrugelmir wrote: »....
As a game of poker. Greece holds the better hand it would appear currently.
I tend to disagree.0 -
Converting the value of balances held by Greek banks isn't the issue. Converting the value of Greek sovereign debt is the issue.
If you have a 1:1 conversion rate, then you have exactly the same number of New Drachmas as you did Euros. And what's a "unit of productivity" and what is it's relevance to Greek sovereign debt?
Well I did say "new New Drachma". If you were going to convert 1:1 and then not issue new money to pay the debt it'd be a fairly pointless exercise.
As for the unit of productivity, well that's deliberately unspecified, but the amount they can do or produce that is of value doesn't change overnight, and some portion of that amount is a unit of it. They were essentially borrowing against this productivity. It's of relevance to Greek sovereign debt in that if what they pay back can only be spent with them and suddenly it's worth less, then they have to give less units of productivity away to cover the debt.P.S. For the avoidance of doubt, I'm not denying that Greece could print a lot of New Drachmas and devalue the currency. (i.e. fiddle the exchange rate.) But then neither am I denying that the likes of the IMF can't turn around and say to Greece; 'You still owe us 40 billion Euros'.
I agree, but from where I'm sitting a switch to a New Drachma and the creation of new New Drachma to pay debts would be the whole point. The 'fiddle' will just happen automatically and so would, essentially, change the amount outstanding in productivity terms for the reasons above and in nominal Euro terms due to a rapid shift in FX equilibrium. If their creditors will only accept Euros then there's a whole new set of questions to be answered.If you think of it as 'us' verses 'them', then it's probably your side that are the villains.0 -
Aren't the demographics somewhat different?sovereign debt was 175% of GDP back in the early 1950s. We managed to get out of that hole, so I'm not that convinced about this "never".
Back then we didn't have to fund 30 year pensions or care home, because not many people lasted very long after retirement.
Isn't the big issue, that if Greece get special treatment then it will set a precedent.0 -
Well, I'm sure that the debts are labelled in Euro, with possibly some in USD, and thus existing the Euro in order to devalue would not help at all.
It would help to make the Greek economy more competitive.0 -
Aren't the demographics somewhat different?
Back then we didn't have to fund 30 year pensions or care home, because not many people lasted very long after retirement.
Isn't the big issue, that if Greece get special treatment then it will set a precedent.
Yes, if Greece get help with their debts it will set a precedent : and a welcome one too.0 -
Presumably it's not welcome by everyone.0
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