Greeks having a referendum on bailout

carveone

Duke Leonal Felmet wrote: »

I am absolutely salivating at the prospect of Sand's impending thesis.

Can't wait!

TBH I think he's just suggesting that a default and exit would be quite fast. Certainly compared to the current malaise continuing for another 10 years.

However, noone here really believes Greece would be better off joining the surrounding nations (Albania, Serbia, Turkey, Libya, Egypt et al) outside the EU. Ireland lost 15% of GDP between 2008 and 2009. Greece would, according to UBS, lose 50% of GDP in one year.

On the other hand, reading the Guardian articles, there is some argument among economists on the exact scenario that would play out. And by arguing that Greece should stay in, the EU and the US are certainly considering their own interests first.

Who knows. Not me, that's for sure. The more I read here, the more I realise how much I'm missing... Maybe the people should have decided after all

Duke Leonal Felmet

carveone wrote: »

TBH I think he's just suggesting that a default and exit would be quite fast.

Nope, he is suggesting that there are two choices:

1) 10 years of austerity - reduces deficit, at a high cost to society

2) 10 days of ????????? - ???????????????????????????????????????

So, he hasn't suggested anything. Only questions. No answers.

FreudianSlippers

Duke Leonal Felmet wrote: »

carveone wrote: »

TBH I think he's just suggesting that a default and exit would be quite fast.

Nope, he is suggesting that there are two choices:

1) 10 years of austerity - reduces deficit, at a high cost to society

2) 10 days of ????????? - ???????????????????????????????????????

So, he hasn't suggested anything. Only questions. No answers.

Don't hold your breath, anyone on boards that promotes default and/or leaving the Euro and/or it's impending doom has a serious case of underpants gnome logic.

I'd like to see one reasonably thought out answer on how it works practically and why it's better for us and Greece. Preferably also not based on the usual false assumptions (such as our situation being comparable to Greece)

Duke Leonal Felmet

carveone

Ah, I see. South Park. Thank God for google!

FreudianSlippers

carveone wrote: »

Ah, I see. South Park. Thank God for google!

Oh when you put it that way it sounds condescending lol

carveone

FreudianSlippers wrote: »

Oh when you put it that way it sounds condescending lol

Nah, just never heard it before! Never really watched South Park which makes me think I'm missing things in Family Guy - you can see where's a reference is being made fun of, but you don't know what it is!

I was thinking the picture above should be printed out and hung in the Dail!

beeftotheheels

carveone wrote: »

Thanks beeftotheheels. That's a very terrifying interesting post! Without the capital controls you mentioned, I guess the nearest parallel would be then with the Weimar Republic where money was destroyed through hyperinflation leading to very significant suffering.

Not necessarily and I'm not sure that an EU exit/ suspension of membership wouldn't actually be in the best interests of Greece in the short to medium term. But that comment has to be put into the context that Greece is ****ed which ever way they jump. Things are bad, things are really bad for them. And with Italy in play things are really bad for every one else.

Back when the Greeks first came clean Germany could, had they wanted to, have saved Greece. Germany cannot save Italy and the Italians make a much better case for being worthy of being saved.

If Greece exited the EU and printed Drachma (and imposed capital controls etc) they would still have to undergo austerity to balance their budgets, but they would know that they had to keep inflation under some kind of control (just not 2%, maybe 5%).

But Greece doesn't benefit from EU membership in the way we do, or Belgium does, or Germany does. Their exports aren't all that significant, they benefited from low interest rates as a sovereign.

Yes they'd lose through CAP but if they become insular then their agricultural economy will survive. They never managed to draw down much of their structural funds because they lacked the required matching local investment.

I think Greece loses whichever way they jump right now, and they face decades of depression (especially since they lack Argentina's resources so comparisons to Argentina are misplaced). So perhaps the decades of depression that the Greek people feel they own is preferable to the decades of depression that they feel has been foisted on them.

Also it is worth noting that I personally struggle to sympathize with the savers in Greece (savers being the ones most hurt by hyperinflation) given the stats on tax payers earning more than €50k vs Porsche owners http://blogs.telegraph.co.uk/finance/ianmcowie/100012894/fast-cars-and-loose-fiscal-morals-there-are-more-porsches-in-greece-than-taxpayers-declaring-50000-euro-incomes/.

cyberhog

@beeftotheheels

Trichet gave an interview in May where he was asked the question

Is it conceivable that a euro country might leave the single currency?

His answer

Trichet: No, that is entirely unrealistic.

http://www.ecb.int/press/key/date/2011/html/sp110528.en.html


Trichet goes on to say

"It is not a working assumption that any government would leave the euro"

http://www.forexlive.com/blog/2011/06/13/trichet-ecb-has-its-own-collateral-framework/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+forexlive-rss+%28Forex+News+by+ForexLive.com%29

So for you to suggest it should have been "blindingly obvious" to the Greeks that they would be forced out of the euro is itself "entirely unrealistic". As much as the adherents of an EU superstate will try to deny it, it remains evident that Merkel and Sarkozy threatened Greece with eviction in order to get Papandreou to scrap the referendum.

beeftotheheels

cyberhog wrote: »

@beeftotheheels

Trichet gave an interview in May where he was asked the question



His answer



http://www.ecb.int/press/key/date/2011/html/sp110528.en.html


Trichet goes on to say



http://www.forexlive.com/blog/2011/06/13/trichet-ecb-has-its-own-collateral-framework/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+forexlive-rss+%28Forex+News+by+ForexLive.com%29

So for you to suggest it should have been "blindingly obvious" to the Greeks that they would be forced out of the euro is itself "entirely unrealistic". As much as the adherents of an EU superstate will try to deny it, it remains evident that Merkel and Sarkozy threatened Greece with eviction in order to get Papandreou to scrap the referendum.

And if anyone under the age of 10 asks me about Santa Clause my answer would be a hell of a lot more definitive.

Did you read his answers? "Not a working assumption", "entirely unealistic", these are not definitive Nos and bear in mind they reflect his position at the time, because you don't talk about something like collapsing a currency in advance of doing it if you can avoid it at all (Greece forced everyone's hand here).

But anyhow, if we're in the business of picking random quotes off the internet in order to "prove" that "no-one" could have foreseen what is apparently only blindingly obvious to very clever and well educated people try these for size.

From the BBC. Before Merkozy summoned Papandreou to Cannes.

http://www.bbc.co.uk/news/mobile/world-europe-15561153

One MP, Milena Apostolaki, has already defected from Mr Papandreou's Pasok party after the referendum announcement.
She told me: "At this extremely difficult time, the priority must be to make all the sacrifices of the Greek people worthwhile. But this plan divides the nation and puts at risk Greece's European perspective."

"The Prime Minister is tossing Greece's EU membership in the air like a coin", said a spokesman for the opposition New Democracy party.

So Greek politicians realized that the notion of having the referendum was risking Greece's future within the EU without needing to be told this by Merkozy. But you still insist that it was unforeseeable?

Sand

carveone wrote: »

TBH I think he's just suggesting that a default and exit would be quite fast. Certainly compared to the current malaise continuing for another 10 years.

I have looked at the last two pages, truly awestruck at how any other interpretation of my post could be taken - though I actually dont consider an exit (from the euro? EU?) neccessary. You get full marks, everyone else "Could do better".

Duke Leonal Felmet

Sand wrote: »

carveone wrote: »

TBH I think he's just suggesting that a default and exit would be quite fast. Certainly compared to the current malaise continuing for another 10 years.

I have looked at the last two pages, truly awestruck at how any other interpretation of my post could be taken - though I actually dont consider an exit (from the euro? EU?) neccessary. You get full marks, everyone else "Could do better".

Annnnnnnnnd, still no explanation of what the 'ten days' means.

Remember when teacher taught the importance of sticking to the question, when taking exams?

Didn't get through to you, it seems.

So, again, what does the alternative 'ten days' mean?

Sand

@Duke Leonal Felmet

Annnnnnnnnd, still no explanation of what the 'ten days' means

I'm going to have to revise your mark down to "Insufficient, failing".

Duke Leonal Felmet

Sand wrote: »

@Duke Leonal Felmet

Annnnnnnnnd, still no explanation of what the 'ten days' means

I'm going to have to revise your mark down to "Insufficient, failing".

A cowardly sidestep. Seems your rhetoric has no substance, as is usual with your kind.

Sand

The problem is Duke, I've already told you what I think. It's all there. It cant be incomprehensible because Carveone got it. So I'm literally completely puzzled by the last couple of pages of sheer insanity. That isnt rhetoric - short of breaking out sock puppets I cant break it down anymore than I have already.

Either you read what I have posted or you can continue tilting at windmills.

Seems your rhetoric has no substance, as is usual with your kind.

My kind? Can you explain what is meant by that?

let's take a bit of a step back here and not get so personal

Duke Leonal Felmet

Sand wrote: »

The problem is Duke, I've already told you what I think. It's all there. It cant be incomprehensible because Carveone got it. So I'm literally completely puzzled by the last couple of pages of sheer insanity. That isnt rhetoric - short of breaking out sock puppets I cant break it down anymore than I have already.

Either you read what I have posted or you can continue tilting at windmills.

Seems your rhetoric has no substance, as is usual with your kind.

My kind? Can you explain what is meant by that?

I'm afraid I can't explain it, as I have been warned not to.

cyberhog

beeftotheheels wrote: »

But you still insist that it was unforeseeable?

Way to move the goalpost there, dude. That just proves how utterly ridiculous your argument is and that the more you repeat it the less convincing it is.

beeftotheheels wrote: »

(Greece forced everyone's hand here).

Which infuriated our EU overlords who then decided to open the door to Greece leaving the euro zone in order to put Greece firmly back in its place.

oscarBravo

cyberhog wrote: »

...our EU overlords...

Is there any chance you could leave this sort of rhetoric out? Because I see a phrase like that, and I have to struggle not to file you in the same box as all the other people who have such a skewed worldview that it's impossible to have a rational discussion with them.

beeftotheheels

cyberhog wrote: »

Way to move the goalpost there, dude. That just proves how utterly ridiculous your argument is and that the more you repeat it the less convincing it is.

To you.

cyberhog wrote: »

Which infuriated our EU overlords who then decided to open the door to Greece leaving the euro zone in order to put Greece firmly back in its place.

Your arguments are best summarized as "This wasn't obvious to me, so I assume that it wasn't obvious to anyone. The fact that it was obvious to clever people, like those who posted earlier on on this thread, and Greek politicians, and god knows who else, must mean that a fast one was pulled on the Greek people." You seriously want to continue with that argument?

It is simple. There is a club. That club has rules. If you fail to comply with those rules you put your club membership in jeopardy. On what planet could the Greek people think otherwise?

That is not bullying. That is just life.

djpbarry

ei.sdraob wrote: »

If ECB does anything to try to "expel" or "punish" a member it would result in the collapse of the currency...

I really fail to see at this point how excising Greece could do anything other than increase confidence in the Euro.

Sand wrote: »

The problem is Duke, I've already told you what I think. It's all there. It cant be incomprehensible because Carveone got it. So I'm literally completely puzzled by the last couple of pages of sheer insanity. That isnt rhetoric - short of breaking out sock puppets I cant break it down anymore than I have already.

We’ve all understood the same bit that Carveone has understood – 10 days versus 10 years and all that - but what’s lacking is the substantive detail. You might think you’ve spelled it out, but the fact that nobody really gets where you’re coming from should probably act as a subtle hint that your argument is coming up short somewhere.

Scofflaw

djpbarry wrote: »

I really fail to see at this point how excising Greece could do anything other than increase confidence in the Euro.
We’ve all understood the same bit that Carveone has understood – 10 days versus 10 years and all that - but what’s lacking is the substantive detail. You might think you’ve spelled it out, but the fact that nobody really gets where you’re coming from should probably act as a subtle hint that your argument is coming up short somewhere.

Or, to put it another way, we get that you can do the necessary cuts - "austerity" - over 10 days or 10 years. What we don't get - and what, perhaps, you're not claiming - is why anyone would choose the 10 days, or even regard the 10 day approach as an option to put on the table.

cordially,
Scofflaw

carveone

Scofflaw wrote: »

Or, to put it another way, we get that you can do the necessary cuts - "austerity" - over 10 days or 10 years. What we don't get - and what, perhaps, you're not claiming - is why anyone would choose the 10 days, or even regard the 10 day approach as an option to put on the table.

cordially,
Scofflaw

My ears are burning

Without dragging it out, beeftotheheels gave some possiblilities as to why the 10 day approach would be a possiblity in this post. He did qualify the comment by saying that he thought Greece loses whichever way they jump right now.

I think noone really agrees on what would happen in that case. You are trying to forecast an entire economy's future - and that's pretty hard to do if the books I was browsing over the weekend in Hoggis Figgis are anything to go by.

You could write an entire thesis on this subject; which is why I brought it up again. It's terribly interesting to speculate

But a couple of things are quite clear. Firstly, the Greek people don't seem to be all that interested in leaving the EU, going by the polls that were taken. It did become clear that a referendum on "accepting the bailout" would be effectively a referendum on "leaving the EU". Which would be political suicide. Possibly literally given the people's mood at the moment.

carveone

Secondly, I don't think things are quite as grim as they first appear. Greece has been in a similar debt position before but before they joined the Euro. At that time (early 90s) they had absolutely no choice - the free market economy was a far more onerous overlord than any one being conjured up presently. For several years they were unable to borrow on the market at all - they had to settle for 3 and 6 month bonds. And... they made it through.

As soon as they joined the euro, they appeared to relax. Currently 25% of workers are in the public sector, which accounts for 40% of GDP. Perhaps if they toned down the socialism a bit, they'd be a little better off.
Sand earlier said that "There is absolutely no magical escape hatch where they can continue to spend in excess of the revenue they raise." But I think they thought there was, through a bailout. But that temporary patch didn't seem to hold against the pressure of public spending and the resistance against any sort of reductions in it.

Just to try and prove my point above, I went looking for data on the sustainability of various countries debt. I figure this to be "Debt interest repayments/GDP". I had some difficulty tracking anything down other than US graphs so I had to trawl the OECD data and make my own graph. Which was a pain:



I hope it's illustrative. One thing to note that isn't quite shown on the graph is that US debt interest to GDP maintained a 4% level for the entirety of the 80s and 90s, through those huge bull markets... The other thing is that Greece's and Ireland's debt load was previously double the current load.

I'm an engineer, not an economist, so that data just seems logical to me, but actual economics guys are free to correct me. Please do

carveone

Last post honest!

I was told that the problem with that graph data isn't the current position but the trend. Yeah ok. Whatever.

The point was that Greece (and Ireland) can be fixed. I'm getting pretty tired of hearing the pundits on TV telling us how we should just accept that Greece will default and the EU will explode and we're all screwed. Months and months of "banks are thieves, the Greeks' are crooks, the Germans are bullies, blah blah blah". Yeah, it's really helping. The negative waves man...

Well I don't accept any of it. WWIII was "inevitable" in the 80s. I remember programs on TV describing how to build bomb shelters. They were selling Geiger counters in shops for goodness sake. Scared the hell out of people. And... then everyone decided that was a stupid idea, let's not do that.

So I've decided (ta da!) that Greece will not default. It won't be allowed to so we might as well figure out how to fix it. Might as well fix the financial system while we're at it. And Europe can help instead of pointing paws. Let me think...

- Tax evasion. The US seem to do a pretty good job of taxing US citizens everywhere. Dual nationality isn't a way to get out of it for them and it seems to be a way for Greeks. Several posters have mentioned the number of Porche Cayennes versus number of higher earners. Start publishing their owners online and see how many of them get turned in. Stuff privacy! If tax evasion is their national pastime, let's see how well they play it then!

- Tax havens. Enough said. The use of these for tax evasion is well known. Shut them down.

- Land and house registries. In Greece and in Ireland. Makes it easier to see who needs to pay some tax...

- What are Greece's main industries. Do they pay tax? Shipping seems to be an excellent way of avoiding tax by flying different flags.

- Their army seems to be a large expense. They have conscription according to wikipedia which also says their budget is 7 billion or 3% of GDP. Sounds too high. Ours is 0.7% of GDP which sounds nice and non-threatening. It's probably something to do with Turkey - the EU and US can help there with some sort of assurance or guarantee.


Europe, the US and the WTO can help massively on point 2, 4 and 5. Germany can help by reducing its trade surplus - be nice if they actually bought something from the rest of us for a change. The EU and US can do something about the credit default swap market which has long since got out of hand. Along with HF Trading - you should be made hold a transaction for a minimum of 10 seconds to avoid a punitive tariff. The stock markets are to invest not to speculate for 10 milliseconds.

Good night!

cyberhog

beeftotheheels wrote: »

It is simple. There is a club. That club has rules. If you fail to comply with those rules you put your club membership in jeopardy.

There is no rule against holding a referendum my friend, the fact the proposal came out of the blue in no way invalidates the Greek people's democratic right to decide on their destiny.

However it is clear that our EU overlords were mystified by the decision to consult the people.

The referendum proposal “surprised all of Europe,” Sarkozy told reporters in Paris. “The plan adopted unanimously by the 17 members of the euro area last Thursday is the only possible way to resolve the problem of Greek debt.”

The thought of allowing the people to have their say was just a damaging distraction to our EU overlords.

Whereas, in Canada, where they still value democratic decision making we saw clear support for Papandreou’s proposal.

Bank of Canada Governor Mark Carney said the Greek government is right to seek broad democratic support on whether it should accept the financial-rescue plan....

Mr. Carney notes that it is “imperative that there is widespread support” for tough decisions to implement major fiscal austerity measures

“If it’s the judgment of the Greek government that this is the best approach to validate that support, we fully respect that,” Mr. Carney said.

http://www.theglobeandmail.com/report-on-business/economy/carney-says-greece-right-on-referendum/article2220900/

But all Greece got from our EU overlords were threats about withholding aid and being kicked out of the euro zone, they have shown no respect for the Greek people's right to have their say. The EU overlords have meddled in Greek domestic affairs and have clearly undermined democracy in that country.

Scofflaw

cyberhog wrote: »

There is no rule against holding a referendum my friend, the fact the proposal came out of the blue in no way invalidates the Greek people's democratic right to decide on their destiny.

However it is clear that our EU overlords were mystified by the decision to consult the people.



The thought of allowing the people to have their say was just a damaging distraction to our EU overlords.

Whereas, in Canada, where they still value democratic decision making we saw clear support for Papandreou’s proposal.


http://www.theglobeandmail.com/report-on-business/economy/carney-says-greece-right-on-referendum/article2220900/

But all Greece got from our EU overlords were threats about withholding aid and being kicked out of the euro zone, they have shown no respect for the Greek people's right to have their say. The EU overlords have meddled in Greek domestic affairs and have clearly undermined democracy in that country.

Frankly, that's a quite hysterical reading of things - reflected in the repetition of "EU overlords". If that's "interference", then so is the comment from Canada - and this one too:

Federal Natural Resources Minister Joe Oliver says he's hopeful a "blocking minority" in the European Parliament will prevent the EU's fuel quality standards — which would penalize the oilsands — from being adopted in the short term.

Oh noes! The Canadian Minister is trying to influence the course of the European Parliament! Let's all have a hissy fit!

Nobody has interfered in Greek democracy - they have made their positions clear, and Greece's parliamentarians have responded to those positions. The Greeks could have held their referendum - they chose not to because they'd rather have the money. Germany is not only entitled to make any stipulations it likes about its money, but must do so, because it the money comes from its citizens.

Countries comment on, urge, and make demands on other countries all the time. Democracy doesn't mean you're able to dictate what happens outside your country, only inside it. The Greeks cannot decide how the Germans will react to what the Greeks want to do - they can only decide for the Greeks.

regards,
Scofflaw

jonniebgood1

Scofflaw wrote: »

Nobody has interfered in Greek democracy ...

Scofflaw wrote: »

...- they have made their positions clear, and Greece's parliamentarians have responded to those positions. The Greeks could have held their referendum - they chose not to because they'd rather have the money. Germany is not only entitled to make any stipulations it likes about its money, but must do so, because it the money comes from its citizens.

Countries comment on, urge, and make demands on other countries all the time. Democracy doesn't mean you're able to dictate what happens outside your country, only inside it. The Greeks cannot decide how the Germans will react to what the Greeks want to do - they can only decide for the Greeks.

Do you not see a contradiction between the 2 elements quoted? I agree with what you are saying in the second part but the ultimate result of it is interference in Greek democracy, whether rightly or wrongly.

Scofflaw

jonniebgood1 wrote: »

Do you not see a contradiction between the 2 elements quoted? I agree with what you are saying in the second part but the ultimate result of it is interference in Greek democracy, whether rightly or wrongly.

Only if one defines "Greek democracy" as "the right to make choices without consequences" or "the right to ignore reality when voting" - definitions one does regularly find used here for sovereignty.

Otherwise, no, I can't say I see a contradiction. Greece wants German money. They made certain commitments to the Germans to get the money. Both parties signed off on the deal. Without consulting the Germans, Papandreou decided on a referendum on the deal. The Germans pointed out that a referendum on the deal was not included in the agreement already made, and that the agreement would not necessarily remain in play - they also pointed out that there would be no new deal, so if the Greeks said no to the deal on offer, they would be on an exit trajectory from the eurozone.

To my mind - and, again, I should perhaps point out that I think a Greek referendum is right, and that the Germans are wrong to oppose it - those are simply consequences being pointed out.

What should the Germans have done? Should they have said nothing for fear of being accused of interference, and then when the Greeks, thinking there were no real consequences - except perhaps a yet better deal - voted No, suddenly turned round and said "oh dear, that means the deal's off, there isn't a new deal, the door is over there"? Or should they have let the Greeks veto the deal, and then offered them an even better one?

The German government is responsible to the German people, not to the Greek people. That means the German government has the right to set and make public whatever terms it may choose in respect of its money (indeed, not to do so would be deceptive). The effect of that on how - and whether - the Greeks vote is up to the Greeks.

Democracy is a method for making decisions. To interfere with it requires one to engage in electoral fraud, either at the public level so as to distort the outcome of elections or referendums, or at the parliamentary level to distort the outcome of parliamentary votes. Another country setting out the terms it will deal with you on is not part of that - it's diplomacy.

cordially,
Scofflaw

KerranJast

Scofflaw is on the ball as usual. The Germans didn't stop the Greek referendum. They simply outlined the consequence of a No vote. That this new bailout deal is all that's being offered and the alternative is Greek default and expulsion from the Eurozone.

What stopped the Referendum is the Greek opposition parties suddenly realised they couldn't be responsible for the entire destruction of the Greek economy (bad enough as it is right now its nowhere near as bad as it would be if they had no external help) and so they went along with a Unity Government plan.