What to do about Greece

[3 Justin 3]

Get Greece out of the EU. What a terribly run country. President is a complete maroon.

[mikey_the_redneck]

....and there's more!

http://www.zerohedge.com/article/hea...estment-banker

02/19/2010

"Yesterday's news about the departure of the head of the debt management agency, Spyros Papanicolaou, was somewhat of a yawner, until we realized that his replacement would be none other than Petros Christodoulou, who until today was head of Private Banking and Group Treasury at the National Bank of Greece (reporting directly to the CEO of the NBG Tamvakakis), as can be seen on the org chart below. Yet was is oddest, is that Mr. Christodoulou worked not only as head of derivatives at JP Morgan but also held comparable posts at Credit Suisse, and... wait for it, Goldman Sachs... Uh, say what?"

How handy for Goldman to have their agent working in the Greek government.....

[MoneyGuy]

Greece's economy is about the size of Quebec's. This shouldn't be a big deal, but of course it wil be.

[Stranger]

My wife's family is Greek. They left Greece to find a better life in Canada. Her uncle and I were talking about this whole situation. He said the attitude in Greece is:

"Sure I'm cheating the system, but you should see how bad my neighbor cheats!"

[Julio]

Originally Posted by SeeBass

Should have let the Russians have it in the Malta conference.

Yalta?

[SeeBass]

Originally Posted by Julio

Yalta?

Mes mou are correct.

[Tron_fdc]

The problem here is how intertwined the EU is. Everyone owes everyone else money, and if one of the payees defaults, everyone panics and starts pulling their loans to other countries. In the meantime all the countries that owe each other money (the US is in there as well) start defaulting on their loans, and we see a massive economic collapse. It's an economic house of cards.

Countries like Greece will continue to sabre rattle because they have a massive debt/GDP ratio, and the rest of the world has more to lose than gain by letting them go under. I've seen similar things happen in the business world when one company owes 10 different companies a pile of money, then threatens bankruptcy to avoid creditors. No one wants them to go under, because it sends a ripple effect through the market.

My opinion is screw em. Let the markets collapse, and rebuild it. If we had of ripped off the proverbial band aid 2 years ago and let the markets fail we'd already be on the road to recovery. Instead we have individuals, corporations, even countries that have been propped up by bailouts and are so badly mismanaged, you're only prolonging the inevitable.

[ricosuave]

great big pic 'splains it all:

http://graphics8.nytimes.com/images/...INTS-popup.jpg

[VladtheImpaler]

Well, on positive note, once Greece leaves the Euro and inevitably devalues, Greek vacations will suddenly be very affordable.

[Caged Great]

The thing that gets me is that if german banks for example owe Italian banks money and vice versa, couldn't they just cancel each other's debt out and get it off the books?

Sort of like when you owe your friend 10 bucks and he owes you 10 just call it square.

I think that would help to get a lot of this on paper debt off the books and then you can work at clearing the rest off the books in short order.

[FlameOn]

Originally Posted by Caged Great

The thing that gets me is that if german banks for example owe Italian banks money and vice versa, couldn't they just cancel each other's debt out and get it off the books?

Sort of like when you owe your friend 10 bucks and he owes you 10 just call it square.

I think that would help to get a lot of this on paper debt off the books and then you can work at clearing the rest off the books in short order.

Its not quite that simple, you have to take a lot of things into account like the differing interest rates that those loans are getting paid at. Banks rely on these interest payments to keep the cash flow going. If not done right you'll end up with liquidity problems amongst banks and no one gets their money because no money is streaming in in interest payments. Banks themselves owe lots of money to lots of different places.

Remember banks leverage money and don't really keep the majority of deposits on hand at any given time. This was a big problem with the last banking crisis when some US banks were over leveraged in some cases up to 32 to 1, when money stops moving between banks the whole system freezes up.

[chemgear]

Originally Posted by VladtheImpaler

Well, on positive note, once Greece leaves the Euro and inevitably devalues, Greek vacations will suddenly be very affordable.

Exactly, that's pretty much the only way the Greek economy can pick itself back up. Without the ability to devalue their currency (and being stuck with the Euro) they'll never get their economy to grow/pay back stuff if they keep cutting and cutting.

[icarus]

I saw an poignant comment on the BBC website to the following effect: you know there is something seriously wrong with the system when a referendum in Greece has the eyes of all the markets and advanced economies of the world watching it with such bated breath. How did we get here?

[Sylvanfan]

http://ca.news.yahoo.com/talks-greec...023140696.html

Well Papendreuo is out and the Greeks will go with a National Unity government.

[CaptainCrunch]

It doesn't matter which government is in place, the poison pill is in place. Until the Greeks start paying taxes, until the pensions are cut and the social programs are cut and a massive number of their public servants are fired, I doubt they're going to see any money from the EU.

All this is doing is reshuffling the deck chairs on the Titanic.

Personally, it would be interesting to see the bailout not happen and for Greece to run out of money.

I would expect that even if the National Unity Government tries to push through the Austerity Measures, that they're in for a huge amount of strikes and riots.

[FlameOn]

Greek crisis has been spilling over into Italy in the past little while. PM and womaniser Berlusconi, having survived over 30 confidence measures before, has been forced to resign when the entire opposition party abstained from voting on the most recent budget. Hopefully all the austerity measures make it through and we don't have a huge Euro crash.

http://www.bbc.co.uk/news/world-europe-15646536

[chemgear]

Originally Posted by FlameOn

Greek crisis has been spilling over into Italy in the past little while. PM and womaniser Berlusconi, having survived over 30 confidence measures before, has been forced to resign when the entire opposition party abstained from voting on the most recent budget. Hopefully all the austerity measures make it through and we don't have a huge Euro crash.

http://www.bbc.co.uk/news/world-europe-15646536

Well, at least he can now release his (previously delayed) album of love songs - seriously.

I wonder what kind of leadership will fill the vacuum - and what they'll actually do to turn things around. The latest batch of austerity has already been mostly (all?) negated by just the recent increase in borrowing costs. They're up to what, nearly 7% now?

[macker]

Originally Posted by FlameOn

Greek crisis has been spilling over into Italy in the past little while. PM and womaniser Berlusconi, having survived over 30 confidence measures before, has been forced to resign when the entire opposition party abstained from voting on the most recent budget. Hopefully all the austerity measures make it through and we don't have a huge Euro crash.

http://www.bbc.co.uk/news/world-europe-15646536

Italy could do similar damage to US economy that was caused by Lehman Brothers if they don't get this mess sorted out.

[FlameOn]

Originally Posted by chemgear

Well, at least he can now release his (previously delayed) album of love songs - seriously.

I wonder what kind of leadership will fill the vacuum - and what they'll actually do to turn things around. The latest batch of austerity has already been mostly (all?) negated by just the recent increase in borrowing costs. They're up to what, nearly 7% now?

That's insane... aren't AAA rated countries borrowing at 0.6%

[chemgear]

Originally Posted by FlameOn

That's insane... aren't AAA rated countries borrowing at 0.6%

http://www.bloomberg.com/quote/GBTPGR10:IND

European (most/many/all the smart?) banks are dumping sovereign bonds at a loss now on top of this. Can't be helping at all . . .

http://www.bloomberg.com/news/2011-1...en-crisis.html

I have the image of a game of musical chairs . . . let's see who's left holding the pile of worthless crap when the music stops.