Greek Financial Crisis

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hullefc said:
The IMF are getting cold feet with the full backing of the US, who are concerned enough with Syriza's overtures to Russia. The Greeks could always by-pass the Troika and ask the Asian Infrastructure Investment Bank (AIIB) for a loan.

The EU are doing whatever they can, to claim that Sunday's referendum is null and void before the Greeks even vote.

Referendum question not legally correct - EC's Dombrovskis
Greeks are being asked a question in the referendum which is not factually or legally correct, according to European Commission vice-president Valdis Dombrovskis has said.

In an interview with Die Welt, he said:

The referendum question is neither factually nor legally correct".

The established orders' voices are getting clearer and clearer. 'You can have democracy providing it brings the result we want'.
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I hope the euro-fascist state is kicked right in the bollocks on Sunday. A massive No vote would see them in disarray. As you say, the creditors are arguing among themselves now: the IMF and now the European Financial Stability Facility (Greece's biggest single creditor) have indicated that debts need to be either written off completely or kicked so far down the road as it doesn't matter. Even Washington is calling loudly for a deal. The European Commission are becoming increasingly isolated over the murderously hard line approach to the Greek Government and its people.

I dont see any panic amongst Syriza, I see it in the words of the Euro Group and their spokesman Dijsselbloem.
 
I really enjoyed this video. Very related to what the world is increasingly afraid of. Greece is the word! An awesome 30 minutes here.... WATCH!

Key word here is "debasement"


 
I don't even pretend to understand stuff like this

Let’s first dissect the IMF’s assertion that the old austerity plan was working.

The first precondition was that long-term interest rates fell substantially below those expected in the original agreement. This was the result of global deflationary pressures and a co-ordinated policy of quantitative easing, and implicit state guarantees for south European debt after Mario Draghi’s 2012 “whatever it takes” speech.

Another way of putting this is: the Troika’s 2010 and 2011 austerity programmes for Greece are only sustainable because the ECB in 2012 exposed the governments of the entire Eurozone to the debt of the Eurozone.

But here’s the critical paragraph. To go on using 15 per cent of its GDP to pay down its €320bn debt until 2045 “would require primary surpluses of 4+ per cent of GDP per year and decisive and full implementation of structural reforms that delivers steady state growth of 2 per cent per year (with the best productivity growth in the euro area) and privatization”.

This is IMF speak for “it’s impossible”

http://blogs.channel4.com/paul-mason-blog/greece-crisis-failure-economics-face-politics/4031


Errrrr, okay
 
kithnou said:
http://www.theage.com.au/world/when-greece-forgave-germanys-debt-20150702-gi43a0.html

When Greece forgave Germany's debt

Germany once benefited from other countries forgiving its debts and should have sympathy for calls to do the same for Greece today.

London: Forgiving debt, if done right, can get an economy back on its feet.

The International Monetary Fund certainly thinks so, according to a new report in which it argues Greece should get help.

But Germany, another major creditor to Greece, is resisting, even though it should know better than most what debt relief can achieve. After the hell of World War II, the Federal Republic of Germany – commonly known as West Germany – got massive help with its debt from former foes.

Among its creditors then? Greece.

The 1953 agreement, in which Greece and about 20 other countries effectively wrote off a large chunk of Germany's loans and restructured the rest, is a landmark case that shows how effective debt relief can be. It helped spark what became known as the German economic miracle.

So it's perhaps ironic that Germany is now among the countries resisting Greece's requests for debt relief.

Greek Finance Minister Yanis Varoufakis claims debt relief is the key issue that held up a deal with creditors last week and says he'd rather cut off his arm than sign a deal that does not tackle the country's borrowings.

The IMF backed the call to make Greece's debt manageable with a wide-ranging report on Thursday that also blames the Greek government for being slow with reforms.

Despite years of budget cuts, Greece's debt burden is higher than when its bailout began in 2010 – more than €300 billion ($435 billion), or 180 per cent of annual GDP – because the economy has shrunk by a quarter.

Here's a look at when Germany got debt relief, and how such action might help Greece.

Forgive us our debts

The 1953 London Agreement, hammered out over months, was generous to West Germany. It cut the amount it owed, extended the repayment schedule and granted low interest rates.

And crucially, it linked West Germany's debt repayment schedule to its ability to pay – tying repayments to the trade surplus it was running and expected to run. That created an incentive for trading partners to buy German goods.

The deal effectively blocked claims for reparations for the destruction the Nazis inflicted on others.

But it wasn't a one-way street.

"The London Agreement gave Germany sweeping debt forgiveness and protection from creditors, in exchange for pro-market reforms," Professor Albrecht Ritschl, of the London School of Economics said.

West Germany was able to borrow on international markets again, and, free of onerous debt payments, saw its economy grow strongly.

Development activists cite that case when arguing for easier terms for troubled countries today, including Greece.

"The same opportunity should be given to Greece that was given to Germany in 1953," said Eric LeCompte, executive director of the debt relief organisation Jubilee USA.

Greece has had some relief. Private sector bondholders lost 53 per cent of face value in a 2012 restructuring, and remaining debts have been stretched out.

Now most of Greece's debt is owed to its bailout creditors. While the creditors, notably the IMF, have indicated that the debt load should be made more manageable, they've taken no action for years.

Not charity

The German debt forgiveness was driven by the United States, which pressed others to get a deal – British creditors gave up two-thirds of what they were owed.

It wasn't charity. The US needed a strong West Germany as an ally against the perceived threat that was the Soviet Union.

Yale University professor Timothy Guinnane warns against making too many comparisons, partly because Germany was so much more important in global geopolitics than Greece today.

And Germany had economic pedigree, being a big exporter. Greece, on the other hand, hasn't. That's partly why Germany in particular is insisting on reforms to make Greece more competitive.

"The US was basically the last man standing after the war and essentially decided to cut Germany's debt in half," Professor Guinnane said. "It was a hard-nosed decision ... it's wrong to say it was an act of generosity."

Lessons learned

Still, there are echoes from the German case that are relevant to Greece today.

The deal to help Germany was based on a realistic way for the country to pay its debts – Mr Varoufakis has suggested debt repayments be linked to growth. Over the bailout years, Greece has had to meet debt commitments even though its economy was in a depression.

Germany's deal also acknowledged that mistakes after World War I in imposing punitive conditions helped boost extremists. In its misery, Greece has seen votes go to radical parties of left and right, including Nazi-inspired Golden Dawn.

"It's deeply ironic that it's forcing Greece into a position that's prompting the rise of extremist parties," Professor Guinnane said.

Change ahead?

One of the reasons why relations between Greece and European creditors deteriorated is the disagreement over what to do about the country's debts.

Still, there are signs of hope for Greece.

Cyprus has said it could consider writing off €330 million ($480 million) in rescue loans to Greece. The US, while not directly involved, has consistently advocated debt relief.

The IMF came out most forcefully on Thursday, arguing in a report that Greece needs large-scale debt relief alongside €50 billion in new financing through 2018. That sum could be even higher given the economic pain of the recent limits on money withdrawals controls and the increased uncertainty.

It blamed the current government for being slow on reforms and privatisations, but said it was clear that the debt needed to be made more manageable.

"A significant haircut could possibly do it," an IMF official said, on condition of anonymity in line with department rules. "So could an extension, so Greece would not have to go back to the markets for a very long time."

One option the IMF mentioned was doubling the grace period on Greece's loans from EU countries to 20 years and the subsequent repayment period to 40.

"Greece needs a sort of breathing space," the IMF official said.

AP
Click to expand...

Interesting stuff there
 
Mikey_Fitzgerald said:
I don't even pretend to understand stuff like this

Let’s first dissect the IMF’s assertion that the old austerity plan was working.

The first precondition was that long-term interest rates fell substantially below those expected in the original agreement. This was the result of global deflationary pressures and a co-ordinated policy of quantitative easing, and implicit state guarantees for south European debt after Mario Draghi’s 2012 “whatever it takes” speech.

Another way of putting this is: the Troika’s 2010 and 2011 austerity programmes for Greece are only sustainable because the ECB in 2012 exposed the governments of the entire Eurozone to the debt of the Eurozone.

But here’s the critical paragraph. To go on using 15 per cent of its GDP to pay down its €320bn debt until 2045 “would require primary surpluses of 4+ per cent of GDP per year and decisive and full implementation of structural reforms that delivers steady state growth of 2 per cent per year (with the best productivity growth in the euro area) and privatization”.

This is IMF speak for “it’s impossible”

http://blogs.channel4.com/paul-mason-blog/greece-crisis-failure-economics-face-politics/4031


Errrrr, okay
Click to expand...

If you start with the observation that an Economist is someone who sees something happen in real life, then proves it in theory, that would help.

And that the whole premise of the Euro was founded on Economists being asked to ignore, er, "Basic Economics For Idiots. Part 1" to let the whole thing get started in the first place.

So they are now trying to solve a problem that they pretended could/would never ever happen. But astoundingly, IT HAS.
 
roydo said:
If you start with the observation that an Economist is someone who sees something happen in real life, then proves it in theory, that would help.

And that the whole premise of the Euro was founded on Economists being asked to ignore, er, "Basic Economics For Idiots. Part 1" to let the whole thing get started in the first place.

So they are now trying to solve a problem that they pretended could/would never ever happen. But astoundingly, IT HAS.
Click to expand...

 
Politicians trying to prevent Economic reality.

A plague on all their houses. You kneel and grimace beneath our vanity and insanity Greece. We will blame you.

Greece aint blameless, but the architects of this joke are the culprits.
 
roydo said:
Politicians trying to prevent Economic reality.

A plague on all their houses. You kneel and grimace beneath our vanity and insanity Greece. We will blame you.

Greece aint blameless, but the architects of this joke are the culprits.
Click to expand...
Why? For loaning them the money in the first place?
If you live beyond your means that is your responsibility not the responsibility of the person loaning you the money!
Syriza are the natural cancer that flows from idiocy
We have the same sort in Ireland, Sinn Fein
Got bored killing and now want the sniff of power and to destroy all comers
 
If you loan money to someone who has defaulted 17 times in the past you dont deserve to get your money back. Thats the natural market force at work, piling more debt on top of them is voodoo economics at its best.
 
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