Greeks having a referendum on bailout

oscarBravo · 03-11-2011 12:47AM

Going Forward wrote: »

These so-called fragile banks which consistently offered loans to those with no acknowledged means of repayment now deserve to topple.

This at least would go some way to cleaning up the capitalist mess created by cavalier financiers within the banking sector.

And if it causes untold misery to tens of millions of people in the process, well, that's a small price to pay for a pound of flesh, isn't it?

beeftotheheels · 03-11-2011 12:56AM

Scofflaw wrote: »

I think he reckons he'll pull it off. Personally, I'd say his odds are good, too.

cordially,
Scofflaw

I'd like to agree on one level, but I can't. If he doesn't get turnout of 40% the referendum means nothing in Greek law. Under 55% and the Government must take it under advisement only. So he needs not only to pass it, but ideally to get turnout up around 56% to even make it binding on the Greek opposition, let alone the threshold for making it morally binding on the Greek electorate.

Leaving that aside, we've seen from the Dexia and DB announcements that the banks were muscled (post July deal) into holding onto their GGBs and I can only imagine more so now. Does this throw enough uncertainty into play that they can wiggle out and start off loading? The 50% deal, currently, seems to be "voluntary" i.e. those that governments can cajole being banks and perhaps insurers. If they start offloading the debt the only purchasers will be distressed debt funds so they will never sign up to a "voluntary" transaction like this.

The official creditors won't sign up, so a collective action clause won't help, the only way to get the debt down is a hard legislative default and I struggle to see how they could carve the official creditors out of one of those.

We're in the endgame, and depending on whether you attribute that term to chess or bridge he's subject to either a pin or a squeeze. He might survive but I think that the odds are heavily stacked against him (Greece in the Eurozone) at this time. I just suspect that the odds have been so stacked for quite a while now.

Scofflaw · 03-11-2011 01:02AM

beeftotheheels wrote: »

I'd like to agree on one level, but I can't. If he doesn't get turnout of 40% the referendum means nothing in Greek law. Under 55% and the Government must take it under advisement only. So he needs not only to pass it, but ideally to get turnout up around 56% to even make it binding on the Greek opposition, let alone the threshold for making it morally binding on the Greek electorate.

Leaving that aside, we've seen from the Dexia and DB announcements that the banks were muscled (post July deal) into holding onto their GGBs and I can only imagine more so now. Does this throw enough uncertainty into play that they can wiggle out and start off loading? The 50% deal, currently, seems to be "voluntary" i.e. those that governments can cajole being banks and perhaps insurers. If they start offloading the debt the only purchasers will be distressed debt funds so they will never sign up to a "voluntary" transaction like this.

The official creditors won't sign up, so a collective action clause won't help, the only way to get the debt down is a hard legislative default and I struggle to see how they could carve the official creditors out of one of those.

We're in the endgame, and depending on whether you attribute that term to chess or bridge he's subject to either a pin or a squeeze. He might survive but I think that the odds are heavily stacked against him (Greece in the Eurozone) at this time. I just suspect that the odds have been so stacked for quite a while now.

For the first time ever in this crisis, I'm prepared to agree with that heavily over-worked phrase (to some extent). Papandreou has brought the whole can-kicking strategy to a point of crisis - not necessarily the point of crisis, depending on the vote, but definitely a point of crisis.

To be honest, I'd be very surprised if the turnout in Greece is low. I cannot imagine it being low in Ireland under similar circumstances.

cordially,
Scofflaw

oppenheimer1 · 03-11-2011 01:03AM

oscarBravo wrote: »

And if it causes untold misery to tens of millions of people in the process, well, that's a small price to pay for a pound of flesh, isn't it?

One could put forward the argument that you have to burn it down before it can be rebuilt. Perhaps it will be rebuilt in a fairer manner? Economics is an entirely human construct, it has no fundamental laws like nature. If the will is there, there is no reason for anyone to suffer.

That said, it is unlikely it will be rebuilt in a more fair manner. The crisis will cause the suffering of millions and many will die, either directly or indirectly. Perhaps we should be ashamed of the society in which we have helped to build and be a part of if this is allowed to happen (along with the many other daily tragedies)?

amacachi · 03-11-2011 01:05AM

oppenheimer1 wrote: »

One could put forward the argument that you have to burn it down before it can be rebuilt. Perhaps it will be rebuilt in a fairer manner? Economics is an entirely human construct, it has no fundamental laws like nature. If the will is there, there is no reason for anyone to suffer.

That said, it is unlikely it will be rebuilt in a more fair manner. The crisis will cause the suffering of millions and many will die, either directly or indirectly. Perhaps we should be ashamed of the society in which we have helped to build and be a part of if this is allowed to happen (along with the many other daily tragedies)?

What unfairness has there been to Greece so far?

beeftotheheels · 03-11-2011 01:07AM

Scofflaw wrote: »

For the first time ever in this crisis, I'm prepared to agree with that heavily over-worked phrase (to some extent). Papandreou has brought the whole can-kicking strategy to a point of crisis - not necessarily the point of crisis, depending on the vote, but definitely a point of crisis.

To be honest, I'd be very surprised if the turnout in Greece is low. I cannot imagine it being low in Ireland under similar circumstances.

cordially,
Scofflaw

The Greek electorate will be faced with one hell of a choice. 10 more years of austerity within the Eurozone or who knows what outside it. Are you sure that faced with the same choice the Irish people might not be tempted to reserve judgement?

Going Forward · 03-11-2011 01:08AM

oscarBravo wrote: »

And if it causes untold misery to tens of millions of people in the process, well, that's a small price to pay for a pound of flesh, isn't it?

And there will be no misery if the austerity measures are quietly accepted by the Greeks?

There are no winners in this then, except the banks?

Going Forward · 03-11-2011 01:10AM

beeftotheheels wrote: »

The Greek electorate will be faced with one hell of a choice. 10 more years of austerity within the Eurozone or who knows what outside it. Are you sure that faced with the same choice the Irish people might not be tempted to reserve judgement?

Surely the Greeks could be compelled to vote twice?

oppenheimer1 · 03-11-2011 01:13AM

amacachi wrote: »

What unfairness has there been to Greece so far?

My post was not particularly aimed at Greece, but more at the unfairness inherent in the financial system.

The idea that someone who shifts around numbers on a computer screen money between different accounts can make many multiples of the salary someone who actually makes stuff can. Granted this is a broader topic than the referendum at hand, but in a sense it does go to the core of the issue. The markets were originally set up in order to help economies, not undermine them as is the case at the moment.

beeftotheheels · 03-11-2011 01:13AM

Going Forward wrote: »

Would the Greeks be compelled to vote twice?

Ha ha, there's no time. If they reject it they default on the 19th of December when they cannot pay the maturing bond, the ECB immediately collapses their banking industry, and then we find out what really happens when a eurozone country doesn't pay its debts.

Perhaps the Irish politicians should learn the lesson of giving us a hard and fast deadline before trusting us with a referendum again?

Scofflaw · 03-11-2011 01:16AM

beeftotheheels wrote: »

The Greek electorate will be faced with one hell of a choice. 10 more years of austerity within the Eurozone or who knows what outside it. Are you sure that faced with the same choice the Irish people might not be tempted to reserve judgement?

Right up to the point where you saw the loonies that would wind up deciding on your behalf if you didn't vote...but, yes, I take your point.

cordially,
Scofflaw

Scofflaw · 03-11-2011 01:20AM

oppenheimer1 wrote: »

My post was not particularly aimed at Greece, but more at the unfairness inherent in the financial system.

The idea that someone who shifts around numbers on a computer screen money between different accounts can make many multiples of the salary someone who actually makes stuff can. Granted this is a broader topic than the referendum at hand, but in a sense it does go to the core of the issue. The markets were originally set up in order to help economies, not undermine them as is the case at the moment.

Not really - the markets were set up as a way for wealthy burghers to invest surplus capital. That an effect of the markets was to allow enterprise to flourish was a bonus, and one that took a long time to realise.

cordially,
Scofflaw

Going Forward · 03-11-2011 01:20AM

oppenheimer1 wrote: »

My post was not particularly aimed at Greece, but more at the unfairness inherent in the financial system.

The idea that someone who shifts around numbers on a computer screen money between different accounts can make many multiples of the salary someone who actually makes stuff can. Granted this is a broader topic than the referendum at hand, but in a sense it does go to the core of the issue. The markets were originally set up in order to help economies, not undermine them as is the case at the moment.

You have hit the nail on the head.

oppenheimer1 · 03-11-2011 01:27AM

Scofflaw wrote: »

Not really - the markets were set up as a way for wealthy burghers to invest surplus capital. That an effect of the markets was to allow enterprise to flourish was a bonus, and one that took a long time to realise.

cordially,
Scofflaw

Well, it was a mutually beneficial existence, Investors with spare cash could find returns while companies could find desperately needed capital. Its a long way from the idea of the credit default swap and insuring assets you don't even own and other self serving but ultimately destructive behaviours found in markets today.

Going Forward · 03-11-2011 01:31AM

oppenheimer1 wrote: »

Well, it was a mutually beneficial existence, Investors with spare cash could find returns while companies could find desperately needed capital. Its a long way from the idea of the credit default swap and insuring assets you don't even own and other self serving but ultimately destructive behaviours found in markets today.

I never forget being reminded that any money I had to invest in shares should be seen as money that I could afford to say goodbye to, should things not go according to plan.

And that was in first year of secondary school many years ago now.

What was allowed to happen in the intervening period is indefensible.

amacachi · 03-11-2011 01:33AM

beeftotheheels wrote: »

The Greek electorate will be faced with one hell of a choice. 10 more years of austerity within the Eurozone or who knows what outside it. Are you sure that faced with the same choice the Irish people might not be tempted to reserve judgement?

Much more sudden and drastic austerity is their alternative.

Scofflaw · 03-11-2011 01:34AM

oppenheimer1 wrote: »

Well, it was a mutually beneficial existence, Investors with spare cash could find returns while companies could find desperately needed capital. Its a long way from the idea of the credit default swap and insuring assets you don't even own and other self serving but ultimately destructive behaviours found in markets today.

I agree with you there. The term "casino capitalism" seems well-deserved.

cordially,
Scofflaw

beeftotheheels · 03-11-2011 01:34AM

oppenheimer1 wrote: »

My post was not particularly aimed at Greece, but more at the unfairness inherent in the financial system.

The idea that someone who shifts around numbers on a computer screen money between different accounts can make many multiples of the salary someone who actually makes stuff can. Granted this is a broader topic than the referendum at hand, but in a sense it does go to the core of the issue. The markets were originally set up in order to help economies, not undermine them as is the case at the moment.

I don't think that this is an either or situation. I think going forward that we will see significant changes to the world of finance, greater regulatory control, higher capital thresholds, and lower salaries, along with a better pricing of risk all of which is to be welcomed.

However, absent banning capitalism outright, and I don't see that happening, people will always seek to make a profit, and the more profitable a business is, the more it will pay to hire the best and the brightest.

Would you blame an Irish pension fund for investing in Irish Government bonds in 2007? They were told that as their investors aged they should invest in safe assets like government bonds. Would any Irish worker aged 57 have been unhappy to think that his pension was invested in Irish government bonds back in 2007? So now why do we think it is okay to talk about burning the bondholders as though they are some mysterious mythical beings who take money and make it evaporate?

30% of GGBs are held by Greek banks, Greek insurers and Greek pension funds. In so far as they take a hit Greek people suffer.

30% of GGBs are owned by official investors i.e. the ECB and IMF who have been trying to help Greece for the last two years. Why would it be fair that the taxpayers who back those institutions suffer?

Leaving 40% of GGBs in the hands of non Greek, non official investors. But you sink BNPP and Soc Gen and French taxpayers will have to bail them out and France may lose her triple A. Why is that fair? Furthermore, as Soc Gen and BNPP see the default looming they shrink their balance sheets which means they lend less to Pierre who wants to expand his shop and hire another two members of staff, they lend less to Yann who wants to build a new factory and take on 30 people, they lend less to French insurer SA who themselves could be in trouble, and knowing they may have to rely on France for a bailout they lay off staff in Ireland instead of in France as a sop to french politicians.

If we go down that road we end up rebuilding the barriers which the EU and WTO have torn down over the last number of decades. And the lesson from the great depression is that once protectionism kicks in it makes things a lot nastier for everyone, especially small export driven economies like ourselves.

So baby steps to reforming finance and remember that as we go, someone, some living breathing human being, will always pay and that is generally through their pension fund.

Sponge Bob · 03-11-2011 02:32AM

Greece is a problem created by the Greeks and is divorced to a large extent from tehseparate stupidity in banking systems in France and Germany.

If any country can be cut loose from the Eurozone for the benefit of the remainder it is Greece.

Merkel and Sarkozy told them as much today. Whatever the wording of the referendum they are being told to vote for the plan or feck off.

If they vote yes to ambiguity they are on their own. Frankly of they paid taxes and diverted funds to government instead of tax dodging on an epic scale they would be 'in the fold'. But they don't.

Way it is, sorry.

cyberhog · 03-11-2011 04:23AM

Scofflaw wrote: »

Apparently the referendum will indeed be about the bailout, not euro/EU membership:

cordially,
Scofflaw

Wrong

“The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?” German Chancellor Angela Merkel told reporters after crisis talks hours before a Group of 20 summit set to begin today in Cannes, France.

http://www.businessweek.com/news/2011-11-02/merkel-sarkozy-put-greek-euro-membership-to-vote-in-aid-cut-off.html

A recent poll indicated that most Greeks favour staying in the eurozone so I would think the result of the referendum is a foregone conclusion.

oscarBravo · 03-11-2011 10:12AM

oppenheimer1 wrote: »

One could put forward the argument that you have to burn it down before it can be rebuilt.

You could put forward a similar argument for carpet-bombing the favelas of Rio - sure, it would cause widespread death and suffering, but there is death and suffering in the favelas on a daily basis anyway, and perhaps something better could be built in its place?

Going Forward wrote: »

And there will be no misery if the austerity measures are quietly accepted by the Greeks?

If Greece accepts austerity measures, then yes: Greek people will be miserable. I don't think it's unfair to argue that they would be reaping what they have sown with decades of corruption and shoddy public finances.

If Greece rejects what's on offer, then I can't see any reason to believe that the Greek people will suffer any less, and the rest of the world will suffer (albeit to a lesser extent) along with them. I know which I'd rather see.

There are no winners in this then, except the banks?

There are least-worst outcomes, and recognising that would allow us to move past the simplistic analysis that since all outcomes involve pain for someone, it doesn't matter what the outcome is.

bauderline · 03-11-2011 10:55AM

Unless the finance minister seizes control this morning it's all over except for the shouting...

NinjaK · 03-11-2011 10:55AM

I think its fascinating watching the elite go crazy in horror at the thought of the people of Greece actually getting a say in their future. Their greed for money knows no bounds.

Duke Leonal Felmet · 03-11-2011 11:33AM

beeftotheheels wrote: »

oppenheimer1 wrote: »

My post was not particularly aimed at Greece, but more at the unfairness inherent in the financial system.

The idea that someone who shifts around numbers on a computer screen money between different accounts can make many multiples of the salary someone who actually makes stuff can. Granted this is a broader topic than the referendum at hand, but in a sense it does go to the core of the issue. The markets were originally set up in order to help economies, not undermine them as is the case at the moment.

I don't think that this is an either or situation. I think going forward that we will see significant changes to the world of finance, greater regulatory control, higher capital thresholds, and lower salaries, along with a better pricing of risk all of which is to be welcomed.

However, absent banning capitalism outright, and I don't see that happening, people will always seek to make a profit, and the more profitable a business is, the more it will pay to hire the best and the brightest.

Would you blame an Irish pension fund for investing in Irish Government bonds in 2007? They were told that as their investors aged they should invest in safe assets like government bonds. Would any Irish worker aged 57 have been unhappy to think that his pension was invested in Irish government bonds back in 2007? So now why do we think it is okay to talk about burning the bondholders as though they are some mysterious mythical beings who take money and make it evaporate?

30% of GGBs are held by Greek banks, Greek insurers and Greek pension funds. In so far as they take a hit Greek people suffer.

30% of GGBs are owned by official investors i.e. the ECB and IMF who have been trying to help Greece for the last two years. Why would it be fair that the taxpayers who back those institutions suffer?

Leaving 40% of GGBs in the hands of non Greek, non official investors. But you sink BNPP and Soc Gen and French taxpayers will have to bail them out and France may lose her triple A. Why is that fair? Furthermore, as Soc Gen and BNPP see the default looming they shrink their balance sheets which means they lend less to Pierre who wants to expand his shop and hire another two members of staff, they lend less to Yann who wants to build a new factory and take on 30 people, they lend less to French insurer SA who themselves could be in trouble, and knowing they may have to rely on France for a bailout they lay off staff in Ireland instead of in France as a sop to french politicians.

If we go down that road we end up rebuilding the barriers which the EU and WTO have torn down over the last number of decades. And the lesson from the great depression is that once protectionism kicks in it makes things a lot nastier for everyone, especially small export driven economies like ourselves.

So baby steps to reforming finance and remember that as we go, someone, some living breathing human being, will always pay and that is generally through their pension fund.

A well thought out and considered post. I expect that as I scroll downward it will be met by an equally rational response...

mike65 · 03-11-2011 11:45AM

Looks like this "threat" will come to nothing.

http://www.guardian.co.uk/business/blog/2011/nov/03/greek-crisis-referendum-eurozone

An emergency cabinet meeting is supposed to be taking place right now in Athens.

beeftotheheels · 03-11-2011 11:54AM

mike65 wrote: »

Looks like this "threat" will come to nothing.

http://www.guardian.co.uk/business/blog/2011/nov/03/greek-crisis-referendum-eurozone

An emergency cabinet meeting is supposed to be taking place right now in Athens.

The horse has already bolted. EU leaders talking openly about a Greek exit and it is difficult to get that genie back in his bottle.

If the vote is pulled the EU position is that they now need credible evidence Greece can implement the deal which either means a national unity government fully and convincingly committed to implementation (which the opposition has refused to do to date), or the funding won't be paid and Greece will be allowed/ forced to leave.

There's only so long the EU can tolerate the bold child in the back of the class disrupting it for everyone else, the Greeks overplayed this hand and their bluff was called. Will be very hard work for them to even return to the status quo which we had last week.

Duke Leonal Felmet · 03-11-2011 01:00PM

I think they need to go. They haven't played ball since the beginning. That 'fool me once...' quote comes to mind.

meglome · 03-11-2011 01:04PM

NinjaK wrote: »

I think its fascinating watching the elite go crazy in horror at the thought of the people of Greece actually getting a say in their future. Their greed for money knows no bounds.

Imagine the 'elite' expecting the Greeks to pay back the money they borrowed and very unwisely spent. Bastards.

Thrill · 03-11-2011 01:08PM

Greek PM expected to step down to make way for new coalition government - BBC

Breaking News

Prime Minister Papandreou is to go to the country's president within the next half hour. He will offer to stand down to allow a coalition government to take power.

BBC

http://www.bbc.co.uk/news/world-europe-15570986
.

bauderline · 03-11-2011 01:17PM

So Pap has taken his hands off the wheel to see if anyone has the cojones to grab it...

Surely any confidence in Greece to manage its affairs in a predictable fashion has gone for the forseeable future.

I think they have a matter of days to string something solid together or else Merkozy is going to reach for the eject button.

Moreover for anyone in the ECB or IMF to handover another 8bn to Greece they would have to be stark raving bonkers...

Point of no return ?

Greeks having a referendum on bailout

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