Greece - A New Hope

Ossoi_sl said:

WTF are you talking about? They've been on board the austerity gravy train since 2010, it hasn't helped growth one bit - in fact the opposite, you cannot cut your way out of a depression. Hence why the Greek economy contracted by 25% 2010-2014

Each round of bailout funds has been provided with the conditions that Greece cut more. After five years the Greek people clearly feel there is nothing left to cut, hence why they voted in an anti-Austerity party. But the Greek people also want to stay in the Euro, hence putting it to a referendum.

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It doesn't matter how much they've cut to this point. They can't survive without tons of bailout money and the money train will only flow if they make further cuts. Greece spent too much money and its time to pay up. One way or another the pain factor is going to get ratcheted up. If they stay on the Euro they'll need more Austerity. If they refuse they'll have to float their own currency again and then they'll of wished they had opted for more austerity.

Either way, cuts or rapid inflation with a new currency, its all about the same shit and its going to be painful.

aaron_sl said:

What I find interesting is the whole Russian angle to this. Just over a week ago the Greek PM and Putin signed a bunch of deals including a gas pipeline one. Some commentators hinted then that what would happen is the Greeks would leave the EU/Euro and get funding from Russia/China in exchange for lucrative deals, such as the pipeline just mentioned, and even military basing rights. Fastforward to last Monday when it seemed that after having saved his country the PM seemed at the last minute to ditch the Russian deal andgo for a deal with the Troika.

Now, something made the Greek PM get cold feet over ditching Europe and siding with the Russians and Chinese. From what I've heard hinted at it seems most likely that the Greek military would not have been too happy with such a pivot...

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That is interesting. No telling, military take overs have happened over less. Russia coming in and offering to float them until they get their bases and their troops there would certainly make for interesting reaction from the west.

aaron_sl said:

What I find interesting is the whole Russian angle to this. Just over a week ago the Greek PM and Putin signed a bunch of deals including a gas pipeline one. Some commentators hinted then that what would happen is the Greeks would leave the EU/Euro and get funding from Russia/China in exchange for lucrative deals, such as the pipeline just mentioned, and even military basing rights. Fastforward to last Monday when it seemed that after having saved his country the PM seemed at the last minute to ditch the Russian deal andgo for a deal with the Troika.

Now, something made the Greek PM get cold feet over ditching Europe and siding with the Russians and Chinese. From what I've heard hinted at it seems most likely that the Greek military would not have been too happy with such a pivot...

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The Russians are in a precarious financial position themselves. Unless oil prices spike up soon they'll have to pull back on defense and infrastructure spend this year.

As for the Chinese there's their age-old regional economic detente with the West: they don't ingratiate themselves in Europe and Japan, US and Korea don't expand their influence beyond the Asian Tigers. Otherwise you'd see Chinese macroinvestment at the scale and pace you see in Africa and Russia.

Well, oil isn't back to $USD100+ but it has recovered quite a bit and especially so given the relative strength of the American dollar. Russia was proper fucked if oil stayed in the thirties or went to the teens as some predicted but in the sixties all the old production is quite viable. They'd prefer it higher (as would people around here) but this isn't a bad valuation at all and there seems to be some stability at least. It also certainly doesn't hurt that it is outperforming the most recent predictions so budgets were drawn up based on lower prices.

We'll see. Russia ain't rich again but they aren't as deep in the shit as most expected they would be right now.

The problem the Russians would have is that they would be no more likely to get their money back than anyone else. Putin might do it anyway just to show up the Europeans and the IMF, but it would be little more than an expensive gesture - and besides, the chances are that any cash the Greeks get will go straight to paying off their creditors which isn't what Russia would want.

Greek banks will be closed tomorrow while the Greek government decides whether to impose controls on how much cash Greeks are allowed to withdraw, or to allow a chaotic free-for-all and hope the EU is shocked into doing something. Whatever happens, it seems the Greeks won't be able to make their debt payments on Tuesday.

The country is in such a mess anyway they are never going to be able to repay all that they owe as long as they cling to the Euro. They need their own currency so they can immediately devalue it, and the mess will sort itself out in a few years instead of decades.

Maybe Russia hoped to get their money back by sinking hooks into a few people, forcing some things to go their way over time.

If Russia wont get their monies back, theyll send over more troops and claim some region henceforth calling it Novosparta.

So instead of the germans and italians it'll be the russians and the greeks?

Well. It'll be a short war this time. We probably won't even have to come re-re-re-liberate france!

Iannis_sl said:

So instead of the germans and italians it'll be the russians and the greeks?

Well. It'll be a short war this time. We probably won't even have to come re-re-re-liberate france!

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France would finish surrendering to its Muslim immigrants while we were busy dealing with Russia and Greece.

Puerto Rico will soon be in default too due to the mammoth debt's they have taken out in recent past. A good year to see the Keynesian's core philosophy get crushed: eventually all states run out of other peoples' money.

Keynes did not suggest politicians demand unproductive pork for their districts forever, and his response to avoid great depression style economic contraction has been very effective for years. That politicians won't talk straight to their constituents isn't Keynes's fault.

Syriza is campaigning to stay in the EU but Greek banks are saying otherwise. Syriza wouldn't want to preside over the Greek secession since once the EU isn't around to catch all the blame, the Greeks might actually realize who they voted for.

The Troika has exhausted all the haircuts its creditors are willing to take so 30-50% debt forgiveness isn't happening. Remember that during the last round of debt forgiveness, Greece's creditors had already taken a 54% haircut. That's why Syriza hasn't pressed too hard on further debt forgiveness despite the fact that ONLY more debt forgiveness or just plain default are the only real options for Greece having a chance to dig out. Staying in and keeping that insane 175% debt-to-GDP ratio means that even if the Greek economy somehow grew at the rate of China's 7%, it'll keep sinking further and further into debt since it still wouldn't be able to service the debt and it would keep outgrowing the economy.

There's really no mechanism for kicking Greece out of the EU---there's not much in the Lisbon Treaty for leaving the EU at all tbh---so the likely scenario is quite literally the worst one: Greece stays in and their economy crashes without a clear path to fix it and Brussels kinda keeps them around to point at whenever a European city thinks about hosting the summer Olympics.

I guess that includes your paternalistic defense of the aristocracy. Economic depressions are bad for everyone. People and their governments need to be responsible. Part of that responsibility is deciding when to prevent economic collapse with a short term stimulus followed by enhanced regulation of the people that can threaten an entire economy with risky behavior. Part of it is letting people that take risks face the consequences. Ultimately you have to be able to partition risky behavior so that it can never grow so vast that a specific mistake will chain react across the entire system. That's what Glass-Steagall was for. Any corporation that is "too big to fail" is too big to exist, and it was a sequence of neglect that let it get to that level of influence in the first place. If we enforced less vertically integrated businesses then Keynes's solution wouldn't even be necessary. But taking a firm hand with corporations goes against your naive defense of the aristocracy, so that takes us back to denying basic human psychology.

Greece shuts banks in bid to prevent collapse - Jun. 28, 2015

Well, this is it. If Greece actually defaults, they're going to be reduced to third world standards of living and that's not hyperbole. Every Greek that didnt put their savings in a mattress is about to have them all wiped out and replaced with worthless drachmas.

The Greek economy is almost 90% services, they don't produce anything and once the infrastructure goes due to there being no money, so will the tourists and then they won't have anything.

They are lucky. At least they can withdraw or at least should of withdrew euros. Normally when a country goes tits up their currency is worthless. At least the Greeks were able to cash out before hand with a currency that will hold value after the shit show.