Greece default/exiting Euro?

[grandia3]

Greetings fellow investors/traders,

It looks like the euro leaders are having trouble finding the solution for Greece and it seems that default is inevitable, continuous help/fund pouring into Greece is only delaying its default

It seems that the final devastating option for Greece to exit the euro starts to come into mind

Some Greeks also like the idea of exiting euro because they don't want the harsh austerity plan required by the euro

Will the euro finally give the go for Greece to exit?


Either way, the situation currently really bad in Greece (an online friend of mine told me)

Comments/thoughts/discussions are appreciated

edit: oh by the way, if Greece default then there will be blood on the street (c.f. Lehman Brothers 2008)
that is if Greece exit the eurozone, it will be on its own. Greece need to pay those debts, probably by printing money. But, these money will be worthless, and as a lot of banks hold Greece debts, these banks are likely to be doomed

 

[nioka]

and as a lot of banks hold Greece debts, these banks are likely to be doomed

Why not have the banks that have made bad business decisions go broke. If I make a bad business decision then there is no way that the banks would have any sympathy for you and I. If Greece cant pay its debts then IT IS BROKE.

 

[grandia3]

that's true. however, it comes with the consequences

if suddenly a lot of banks collapse, then, logically people will be scared and take their deposit out of the existing banks (which is termed bank run)

then the economic theory says there will be recession since there is not enough saving for investment by firms

and, what is worse our ASX is highly likely to be affected (this is what all of us interested in, isnt it? )

 

[basilio]

There is an excellent story in The Guardian which looks at what is likely to happen to Greece if/when it defaults. It uses the Argentina experience in 2001 as a model.

It doesn't examine the knock on effects on the banks in Europe. And of course in 2001 the rest pf the world was in nothing like the current situation as far as sovereign and personal indebtedness.

I think if Greece goes down we will all be tied around necks with the same rope.

http://www.guardian.co.uk/business/2011/nov/06/euro-crisis-greece-bankruptcy-argentina

 

[McLovin]

I'm yet to see a credible plan of how to deal with an inevitable private sector default if Greece left the Euro. Almost every business loan, mortgage, credit card held by Greeks would be in default.

 

[pixel]

I'm yet to see a credible plan of how to deal with an inevitable private sector default if Greece left the Euro. Almost every business loan, mortgage, credit card held by Greeks would be in default.

According to Reuters: http://blogs.reuters.com/macroscope/2011/11/05/greeces-tiny-debt-load/
Greece's debt is about $500B; spread across about 11 Million Greeks, it means every Greek man, woman, child owes the world close to $50,000. I wonder if anybody has told them about that fact. What would happen if the Banks called in that debt?

On the other hand, Greece's size is about 130 Billion square-metres - covering the debt at about $4/sqm. : I'll take 10 sqm at the entry to the Acropolis and charge each tourist a measly 10c toll...

 

[tothemax6]

They need to accept their mistake and take the medicine. They should never have joined the EU (and that includes all countries involved), which is a dangerous system of excessive political centralization, and they should 'man up' and leave it.
Sure, the adjustments will hurt, but 'short term pain long term gain' as people used to say.

 

[Whiskers]

As I understand, Greece has something like $6 Billion in gold reserves. They stopped selling gold some years ago when their debt started getting to be a problem.

While the gov cannot direct their Res Bank to sell gold, I'm curious why their Res isn't selling now to save some pain on it's citizens? Is there some sort of acrimony between them?

 

[satanoperca]

My logical view of Greece and the EU.

1) Debt is growing faster than available funds to pay interest, no chance of repaying captial, f--kd sooner or later
2) 50% haircut offered as a once off get out of jail free card. Will it allow the Greeks to payoff the remaining debt without throwing their country to the wind, no. Sooner or later they will be back in the same situation as they are now, only a matter of time.
So what is the next alternative?
3) Fallout of the EU? Well it seems logical that sooner or later this will happen, throwing Greece into turmoil, for the short term, but over time things will settle and the rebirth, growth process can and will occur again.

What does these mean for the rest of the world, who nows but truly an exciting time to live in, our current world economic systems are dying, just depends on how much life support govnuts are willing to provide couteous of tax payers pockets and increasing amounts of debt.

Cheers

 

[prawn_86]

Working in currency, since 12 months ago i have said that within the next 4 - 5 yrs at least one country will have left the Euro currency.

All that has happened (at a very basic level) is that debts have been passed from private>government (bailouts) and is now being passed to global governance (eg IMF), but the debt still exists...

 

[noirua]

:topic

:aus:

Voting at 'The Bull'.

ASF have as difficult a time as Greece at the moment and you are needed at the voting zone - it's not €500 billion Aussie Stock Forums needs, just a minute of your valuable time - a valuable vote indeed.

http://www.thebull.com.au/the_stockies/forums.html

:thankyou::aus:

 

[wayneL]

Working in currency, since 12 months ago i have said that within the next 4 - 5 yrs at least one country will have left the Euro currency.

All that has happened (at a very basic level) is that debts have been passed from private>government (bailouts) and is now being passed to global governance (eg IMF), but the debt still exists...

I have always questioned how you can have monetary union without fiscal union.

It cannot last long term IMO.

 

[notting]

Their starting to focus on Italy. Now it gets real.
Greece - I've never seen a prime minister look so happy at the prospect of leaving office!

 

[Starcraftmazter]

As always, the elites will do what benefits their criminal activities the most. If they wanted to do what is correct, Greece would have never applied for nor been accepted into the EMU.

 

[noirua]

I don't think Greece matters anymore as it looks as if Italy is all but gone.
Debts exceeds $2 Trillion with $450 billion repayable in 2012, yes, all the debt is front loaded.
Present interest rate is 6.7% and rising fast.

I believe Germany will pull out of the € as France is also in trouble.
The IMF have with-held funds waiting for Greece.

Only hope is a Chinese rescue of Italy who need a minimum $1 trillion backup .

ASF are also in trouble at 'the Bull' voting zone. We know how Italy feels http://www.thebull.com.au/the_stockies/forums.html :thankyou: :aus:

 

[Aussiejeff]

Greece will never default or leave the eurozone.

Why?

Because the Euroboffins have a plan.

The plan is to have no plan.

Brilliant!

Europe's top economic official Olli Rehn said that while the European Commission had to be ready for all eventualities, there was no study being conducted of how a country could leave the euro zone, which is not foreseen in the EU treaty.

http://www.abc.net.au/news/2011-11-08/berlusconi-in-trouble-as-eurozone-crisis-deepens/3651304

We are all amused.....

 

[grandia3]

from what I understand, economy is about studying the past (regression analysis anyone?)

and often in economic books/articles, there is this sentence: "Learning from the XXX history, from XXXX yrs etc"

so when there is no past reference of similar event, they don't know what to do

sit back and relax, and the solution to this problem will be invented in the future

edit:
additional note:
maybe those officials are too afraid to invent a revolutionary action
just like us, we are too afraid of a sentence which is often appear in law which says "must exercise care and diligence just like what a reasonable person in the position would do"
so what define a reasonable person?

 

[pixel]

from what I understand, economy is about studying the past (regression analysis anyone?)

and often in economic books/articles, there is this sentence: "Learning from the XXX history, from XXXX yrs etc"

so when there is no past reference of similar event, they don't know what to do

sit back and relax, and the solution to this problem will be invented in the future

edit:
additional note:
maybe those officials are too afraid to invent a revolutionary action
just like us, we are too afraid of a sentence which is often appear in law which says "must exercise care and diligence just like what a reasonable person in the position would do"
so what define a reasonable person?

First Law of Political Science:
The terms "official administration" and "reasonable person" shall never ever be found in the same context. They are mutually exclusive.

 

[pixel]

Greece will never default or leave the eurozone.

That was a mere 3 years ago.
And now? There is increased speculation that Greece will be exiting the Euro.
Lots of talk about it in the media:
http://www.ft.com/intl/cms/s/0/6c377...#axzz3OJuhyhBU
http://rt.com/op-edge/219883-greece-euro-possible-exit/

http://www.news.com.au/finance/econ...-would-look-like/story-e6frflo9-1227178728038

What would the consequences be? Does Greece have to leave the EU? Anyone game to speculate?

 

[StockTrader010]

TWhat would the consequences be? Does Greece have to leave the EU? Anyone game to speculate?

If Greece leaves the Eurozone (or the EU), it will set a precedent. It's like opening pandora's box.

What we can be sure of, is that it would definitely lead to a run on the banks (Greek citizens won't want their deposits to be converted to the new Greek currency). At the same time, Greek banks' debt will remain EUR denominated, so any depreciation in the new Greek currency would increase their debt burden. The European banking sector would definitely suffer :.