Greece - Is it saveable?

[Calliope]

The German people, who have a strong work ethic, are not happy at having to bail out the irresponsible Greeks. But they have made their bed and now have to lie in it.

BERLIN: Chancellor Angela Merkel is urging German legislators makers to approve aid for Greece worth E22.4 billion ($32bn) over three years, warning that "the future of Germany in Europe" is at stake.

Ms Merkel's cabinet this week agreed on the German contribution to a three-year E110bn EU and International Monetary Fund bailout for Greece.

It was introduced to parliament yesterday and the Chancellor said she wanted it fast-tracked for passage by both houses by tomorrow. It is not expected to meet significant resistance.

Ms Merkel said the bailout needed to be passed for "the future of Europe, and with that, the future of Germany in Europe"

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http://www.theaustralian.com.au/new...for-greek-action/story-e6frg6so-1225862743485

 

[ASFASF]

Perhaps some perspective on why the Eurozone even exists may shed more light on what is happening.

Europe was wracked by wars for centuries. All realized that there were no winners from this. The League of Nations was initially formed and following WWII moves were made to tie all the nations of Europe financially together so that an attack by one nation on another would probabilistically hurt the attacker more than they had to gain. Welcome to the EEC an later EU.

Naturally a nation at the center of the past trouble and also suffering was a key player -Germany.

Now. How important is the threat of a Eurozone nation's default on the peace and stability of the region?

In my opinion Germany and France see Greece as a stone's throw from Turkey and the Middle East. Greece is a buffer zone. Greece always knew this and have played their cards (even if internally corruptly) accordingly. They will be protected.

Portugal and Spain may buffer a lesser threatening North Africa. They may get some help but not much.

Ireland? Start planting more potatoes; no help is on the way.

As a side note whenever the IMF joins these efforts be sure that Ben Bernanke has just turned the printing press speed upwards so it weakens US currency as well.

 

[Calliope]

The German finger in the Greek dyke, especially when the Greeks are undermining on the other side, won't stop the contagion spreading to the other Mediterranean countries then Ireland and eventually, who knows?:shake:

 

[pixel]

The German people, who have a strong work ethic, are not happy at having to bail out the irresponsible Greeks. But they have made their bed and now have to lie in it.

Of course they aren't happy; but the problem is not so much Greece, but the romantic notion of a United Europe.
Here is my contribution to a friend's blog spot, who asked my opinion on the above question.

The Northern countries have a habit of working up a sweat - well, they have to if they want to stay warm. Whereas the Mediterranean "culture" centers around siesta and lying in the shade to stay cool. The entire idea of Euroland was a failure.
I'm just not sure whether the Poms did well to stay out. It was probably born out of the hubris, dreaming that Britannia can still waive the rules - which she can't and hasn't been able to for 100 years. They still haven't noticed - maybe if they'd joined Euroland, they might have persuaded their new "friends" to bail them out too.

I think the mistake was made when the continental countries tried to emulate the United States. Yanks, for all their differences, are "culturally" in agreement about two tenets:
Every American citizen is as good as the next one and better than most.
It's everybody's right to do what seems necessary to make as many $$$'s as possible.

Europeans differ among themselves to an enormous extent. Some may feel entitled, like the Americans, to any amount of money they wish - but they feel it's their birthright to demand it be given to them. Others know you only get what you work for. Some live to work. Others work just enough to make a living. And each little tribe has the firm conviction that its members are superior to everybody else - especially the immediate neighbours ...
So, in come the pollies and decree "Let there be one union and one currency." Forgetting that it's essential for a stable currency to be backed by a stable and united approach to economic and foreign policy. And what happens? Every pipsqueak country retains the right to promise its citizens stability without concern. Greeks can retire - on full pay of course - at 52. Germans have to work till 65 and even that is under review to be increased. Can you blame the Germans for getting miffed at Angela, if she signs her own citizens' pensions over to the Greeks?
Foreign policy is just as crazy: France and Germany knew in advance, where the invasion of Iraq would be heading. Not only for moral reasons - but the entire sordid affair was doomed to fail. Yet Spain (not to mention the Great Brits) joined in the fun and wasted Billions to tickle GWB's vanity and help him search for something that wasn't there. Is it a wonder that Spain could be the next country to choke on its debt?
If only our political leadership had been smart enough to stay out of that quagmire. We'd be Billions of Dollars better off - not to mention a few of our soldiers' lives. No politician's ego and desire to be mentioned in one sentence with "World Leaders" is worth the immeasurable physical and emotional damage that our military personnel and their loved ones was put through without any real and present danger to Australia or her allies being attacked.

Let's just hope and pray that the new "Europeans", formerly "Warsaw Pact Allies", don't discover the gravy train and demand to be spoon-fed as well - or else .

'nuff said. I'm sure you get my drift.

Now compare Oliver Marc Hartwich: "The fantasy of European integration is over" in today's Business Spectator:

The Greek crisis should have dealt a blow to those who still cling on to this harmonious ideal of European integration. If Greece has demonstrated one thing it is the fact that ‘ever closer union’ cannot effectively conceal economic discrepancies and national interests.

Many European leaders would, however, draw the very opposite conclusion. Instead of recognising the failures of the European project, they call for even more of the same. For example, French President Nicholas Sarkozy has repeatedly advocated a joint economic policy for the whole continent – blissfully ignoring that the EU is an institution in which even an agreement on the definition of chocolate can take 15 years

 

[condog]

ITs a rediculous situation

Lending Greece money will not fix the problem it will delay the inveitable.

Having highly productive and efficient econmies and rediculous mismanaged un productive economies under the same currency is rediculous. The exchange mechanism is what stops low production companies going broke. Thie currency devalues, makes them more competitive, they sell more goods, import less and the problem gets better.

But now they cant just go kick them out unless the other EU countries take on most the debt. If they did kick them out with no remedy, the greek currency would devalue so far, so quick they would have no chance of repayment, as the debts in euros would become comparitavily massive.

So theres imo a very valuable lesson for the EU. If the remain 100% under the euro, they will have no choice for the productive countries to continue to subsidise the unproductive.

The only long term solution i see is to stop lending to the greeks. Take over thier debts and restructure the debts. Then either kick them out with a very manable debt under thier own currency, or heaqvily police thier spending and others to ensure no one goes over an agreed deficit.

But the solution is take over part of the debt, not lend money. It may be politically unpalatable, but its the only acceptable solution that will appease global markets.

It seems however that politically they are to scared to acknowledge this, or economically they are too inept to do so.

 

[explod]

ITs a rediculous situation

Lending Greece money will not fix the problem it will delay the inveitable.

Having highly productive and efficient econmies and rediculous mismanaged un productive economies under the same currency is rediculous. The exchange mechanism is what stops low production companies going broke. Thie currency devalues, makes them more competitive, they sell more goods, import less and the problem gets better.

But now they cant just go kick them out unless the other EU countries take on most the debt. If they did kick them out with no remedy, the greek currency would devalue so far, so quick they would have no chance of repayment, as the debts in euros would become comparitavily massive.

So theres imo a very valuable lesson for the EU. If the remain 100% under the euro, they will have no choice for the productive countries to continue to subsidise the unproductive.

The only long term solution i see is to stop lending to the greeks. Take over thier debts and restructure the debts. Then either kick them out with a very manable debt under thier own currency, or heaqvily police thier spending and others to ensure no one goes over an agreed deficit.

But the solution is take over part of the debt, not lend money. It may be politically unpalatable, but its the only acceptable solution that will appease global markets.

It seems however that politically they are to scared to acknowledge this, or economically they are too inept to do so.

You try and tell a spoilt child it cannot have any more ice cream. Guvmints want to be nice, everyone is nice, lend more print more and nice nice nice.

Too many older people, toooo many people full stop. No one with the b lls to do anything about it. Lets just go back to sleep and party if you can get the credit. Got gold, no worries.

 

[Aussiejeff]

Oh so close to GFC#1 market bottom for Greece stock market. Next stop??

 

[Aussiejeff]

Oh so close to GFC#1 market bottom for Greece stock market. Next stop??

Almost at breakthrough at the last stop on the slippery slope to hell....

Plummeted over -5% in last night's US / Eurozone stock carnage.

Down to 1484.90

 

[basilio]

Start turning the lawns into gardens and the spare rooms into lodgings

 

[billv]

Oh so close to GFC#1 market bottom for Greece stock market. Next stop??

Does anyone know of any companies worth buying there?
Surely this would be the time to buy

 

[Aussiejeff]

Does anyone know of any companies worth buying there?
Surely this would be the time to buy

Haha!

You sure have a wicked sense of humour billv.

 

[billv]

Haha!
You sure have a wicked sense of humour billv.

haha
I'm trying to think outside the square.

Do you believe that the floor is the limit?
You could be right but I'm thinking there would be some companies of value.
Ofcourse I'm not talking about their banking sector

 

[Aussiejeff]

haha
I'm trying to think outside the square.

Do you believe that the floor is the limit?
You could be right but I'm thinking there would be some companies of value.
Ofcourse I'm not talking about their banking sector

From Wiki then...

Greece's main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum. Greece's GDP growth has also, as an average, since the early 1990s been higher than the EU average. However, the Greek economy also faces significant problems, including rising unemployment levels, inefficient bureaucracy, tax evasion and corruption.

In 2009, Greece had the EU's second lowest Index of Economic Freedom (after Poland), ranking 81st in the world. The country suffers from high levels of political and economic corruption and low global competitiveness relative to its EU partners.

So, if you don't mind holding stock which fortune is at the whim of one of the most corrupt
governments in the world, feel free! You might dive in looking for scraps on their charred trading floor, only to find their market plunges further and they slap a punitive withholding tax on equities overnight (or halt trading for some unspecified period - honestly anything is possible over there now, mate) in an attempt to bolster their coffers. They might suddenly admit to being deeper in do-doos than they have let on to date.

Of course, it's all up to you.

Good luck,

aj

 

[Uncle Festivus]

Greece is 're-profiled', again? Just don't mention the 'D' word?

Extending the maturity of outstanding debt -- re-profiling -- would relieve some of the pressure surrounding the 40 billion euro repayment of maturing Greek debt and coupons in 2012, buying time for Athens to stabilize its finances, but without reducing the eventual burden.

"Re-profiling private sector obligations, i.e. Greek government bonds, buys them time but doesn't obviate the fact that they are fundamentally insolvent," said Rabobank strategist Richard McGuire.

NEW YORK, May 13, 2011 (BUSINESS WIRE) -- International investors view a sovereign default by a euro-area nation as more likely than not with more than four-fifths (85%) betting Greece will eventually fail to pay off its debt.

Eighty-five percent of those surveyed this week said Greece probably will default, with majorities predicting the same fate for Portugal and Ireland, which followed Greece in seeking European Union-led bailouts, a new Bloomberg Global Poll shows. The outlook for all three countries deteriorated since January.

 

[tothemax6]

Its really up to Greece.
If they want to save themselves they NEED to leave the EU. Not just for economic reasons.

Seriously, you guys should watch some EU parliament videos on youtube. It is fcked up. They don't even pretend to be in favour of democracy and national sovereignty. They are hell-bent on taking over Europe and turning it into a single, totalitarian socialist state. Sounds crazy and outlandish yes - until you actually hear these people talk and hear about what they get up to. MP's can't even introduce bills - bills are introduced by an unelected commission. They even put out national referendums on treaties, and when the countries vote no, they pretty much say 'wrong answer' and do it anyway.

If countries don't start dropping out of the EU soon it is going to make the USSR look like it wasn't even trying.

 

[ceasar73]

Greece.Here we go again!!

Can someone please explain WTF is going on over there???

IM over it

 

[basilio]

Greece owes $110b to banks which it can't repay. The banks want the government to basically slash and burn the the economy and sell off the remainder at bargain prices to get their money. The people and the country can go hang.

The Greek people don't want to be slashed burned and sold off in the fire sale. They simply want to write off the debts and live happliy ever after... If they do that the effect on the European bank system and then the world economy would be at least as bad as GFC 1 and probably much worse. Given that almost all governments are up to their ears in debt (particularly after rescuing the banks after GFC 1) it's hard to see how our financial system could continue in it's current form.

For the longer explanations check out The Guardian article referenced and the other stories that come up on the page.

http://www.guardian.co.uk/world/2011/jun/15/greece-prime-minister-george-papandreou?intcmp=239
http://www.guardian.co.uk/business/2011/jun/16/greek-debt-crisis-key-questions-answered?intcmp=239

 

[Aussiejeff]

Greece owes $110b to banks which it can't repay. The banks want the government to basically slash and burn the the economy and sell off the remainder at bargain prices to get their money. The people and the country can go hang.

The Greek people don't want to be slashed burned and sold off in the fire sale. They simply want to write off the debts and live happliy ever after... If they do that the effect on the European bank system and then the world economy would be at least as bad as GFC 1 and probably much worse. Given that almost all governments are up to their ears in debt (particularly after rescuing the banks after GFC 1) it's hard to see how our financial system could continue in it's current form.

For the longer explanations check out The Guardian article referenced and the other stories that come up on the page.

http://www.guardian.co.uk/world/2011/jun/15/greece-prime-minister-george-papandreou?intcmp=239
http://www.guardian.co.uk/business/2011/jun/16/greek-debt-crisis-key-questions-answered?intcmp=239

The cuurrent shambolic gummint & any succeeding mish-mash of gummint WILL (with Euro buddies support) save their too-big-too-fail Greek bank buddies at any cost. The pesky hoipoloi are, after all, expendable.

 

[alexc2005]

The real question in my mind is how will this all affect the australian share market?

Is it time to bail on all shares and let things settle down?

I've been through the GFC and am still holding some wounded stocks, i don't wish to go through a similar thing and be nursing my wounds for years to come...

 

[noirua]

The real question in my mind is how will this all affect the australian share market?

Is it time to bail on all shares and let things settle down?

I've been through the GFC and am still holding some wounded stocks, i don't wish to go through a similar thing and be nursing my wounds for years to come...

It puzzles me why strikes in minnow country Greece should be seen as that important. Germany is enormous compared to Greece and its manufacturing side is powering along. Why Australia bothers so much about this baffles me.

It also baffles me why Gillard and Co want to crash the smaller mining sector and mining as a whole; they'll probably say they don't but that is a matter of debate. Sure the mining giants came to a twist their arms up their backs agreement, though again they'll say, "not so", and once again debate may see it differently.

Australia, when you consider land mass and the resource sector, are giants with America and Canada, and yes, many of these stocks are quoted on the UK's AIM market. The Australian Government should take care in this respect as their moves damage resource markets worldwide.

Just as in 2008 and 1987 the falls are overdone but when the downdraft will end is uncertain.