Another Boring Euro Debt Crisis Thread

[DaShi]

You probably know more than the Euro leadership.

[Ben Kenobi]

The US easily has plenty of money to pay it's debts. The problem is Republicans have decided they want to crash the economy by deliberately by forcing a default. Yep, I said they're intentionally trying to destroy the economy and they should be hanged from the street lamps like the treasonous pigs they are.

Uh, no.

Debt has jumped from 64 percent of GDP to 100 percent of GDP in just three years. Yes, America did have the money to pay their bills, but not anymore thanks to the fiscal irresponsibility of the Obama regime.

BTW, Obama still hasn't passed a budget yet.

[Carreidas]

[QUOTE]Sulík: A few years back, we survived an economic crisis. With great effort and tough reforms, we put it behind us. Today, Slovakia has the lowest average salaries in the euro zone. How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?[\QUOTE]Pretty strong argument, don't ya think?PD: why the f*ck my post options (QUOTE, Hyperlink, etc) dissappeared???

[Carreidas]

Sorry for the messy message. For some reasons all my reply options dissappeared.

[Sir Og]

I will lose all my remainig hope for human kind if Greece does not go bankrupt.

[Pekka]

It's so not funny anymore how many times the nazi card has been held up high for anyone questioning the bail outs. It's ALWAYS the "that's a very nationalistic view" when a politician is against giving up money from their own tax payers. Well, duh, "European solidarity"?

Seriously though WTF EUROPE! If you disagree with the bailouts, WHY are you being nationalist and probably a future nazi? That makes no sense what so ever. It's TOO ridiculous. Obviously when that argument is raised, the person who raised it should get some heat from being such an idiot that the world is actually a little bit dumber and worse off because of that person.

[Carreidas]

The thing is that a bail out will hardly help, the situation is so strikingly similar to the Argentinian one in 2001....

Maybe NOT giving a bail out to Greece will be, in the long run, the most beneficial thing for them.

[Elok]

The impression I get of the EU from various news outlets is of a long line of people all tied together by their wrists and ankles, with a couple of drunk, morbidly obese people scattered along the line. The challenge is to keep the fatties from falling over without anyone losing his own balance, subsequently knocking his neighbor off balance...you can keep that up for a while, but not indefinitely, and the fatties aren't going to slim down or sober up any time soon. Is that about the shape of it?

[C0ckney]

dexia will be nationalised. with belgian taxpayers being asked to fork out 4 billion euros for a bank which has an approximate value of zero. another shameful fraud on taxpayers to protect the banking system. two smaller banks (one greek and one danish) have also fallen by the wayside, largely unoticed because of the dexia collapse.

3 months ago when the latest banking stress tests took place, dexia was considered one of the safest banks on the continent. which once again underlines the complete lack of the credibility of the EU/ECB.

to put things in perspective. the size of the EFSF (440 billion euros), which still hasn't been approved, is around 2/3 of the size of dexia's balance sheet.

[Dinner]

The thing is that a bail out will hardly help, the situation is so strikingly similar to the Argentinian one in 2001....

Maybe NOT giving a bail out to Greece will be, in the long run, the most beneficial thing for them.

Their deficit this year is bigger than last year so it's obvious the Greeks haven't gotten serious about this and instead they're spending more then ever because they know the Germans will be forced to pay their debts for them. Personally, I'd kick them out of the Euro and tell them to **** off but maybe German politicians are willing to tell Germans they should pay hire taxes or have fewer retirement funds just so the Greeks can continue to be worthless pieces of ****.

[CerberusIV]

Greece defaulting isn't a magic bullet for their problems. As I understand it they spend, as a government, more than they take in in taxes (a LOT more) and would still be in that position even if they weren't paying their debts. So they need to both balance the books and reduce the debt. If they default they still need to borrow money from somewhere to keep the state running until they can get the books balanced. If they default on the EU/ECB they would be left with the lender of last resort - the IMF alone - and the IMF could well insist on reforms even more painful than they are currently facing.

Ireland could default and be back in the markets within a couple of years but why do that? By playing the "good europeans" card the Irish banks have been recapitalised by the EU and may be seen very soon as a good place to put money - unlike the european banks heavily exposed to dodgy government debts, the economy here is starting to pick up (at least as long as the rest of the world keeps buying our exports and doesn't slip into recession) and the cost of what we are borrowing has been renegotiated down to long term rates we would be unlikely to match from the markets and may eventually be partly written off anyway.

The only real problem is the staggering incompetence of most politicians here may well lead to the view that the EU might as well run the country since carrying on with any of the current political offerings has very little appeal.

(Just as an example of the political incompetence we have is that the Justice Minister, who has been in post since the current government were elected last February, is only now complaining that the EU/IMF deal obliges him to cut police numbers by 1,000 and that the deal agreed by the previous government did not include a mechanism to do so - haven't you had 7 months to come up with an answer to that one Minister?)

[Sir Og]

Greece defaulting isn't a magic bullet for their problems. As I understand it they spend, as a government, more than they take in in taxes (a LOT more) and would still be in that position even if they weren't paying their debts. So they need to both balance the books and reduce the debt. If they default they still need to borrow money from somewhere to keep the state running until they can get the books balanced. If they default on the EU/ECB they would be left with the lender of last resort - the IMF alone - and the IMF could well insist on reforms even more painful than they are currently facing.

They would never get thir **** together if they don't sober up by loosing all the free money flow. Why bother working or thrying to fix probelms when you can prostest on the streets a few days and get the same benefits as people who actually have to work hard.

[C0ckney]

Greece defaulting isn't a magic bullet for their problems. As I understand it they spend, as a government, more than they take in taxes (a LOT more) and would still be in that position even if they weren't paying their debts. So they need to both balance the books and reduce the debt. If they default they still need to borrow money from somewhere to keep the state running until they can get the books balanced. If they default on the EU/ECB they would be left with the lender of last resort - the IMF alone - and the IMF could well insist on reforms even more painful than they are currently facing.

default is not a magic bullet, but it would be the least worst option for greece. they have a problem in that they spend more than they take in taxes. as i understand it, the problem is more to do with the latter. their biggest problem though is that they have a debt burden that they simply can't afford to pay. the 'rescue' package (sorry packages...) which the troika have prescribed for greece is to give her huge loans to pay the interest on the loans that greece can't afford at the moment. at the same time the government has been told to make massive cuts to public spending and raise taxes. so her already unaffordable debt burden has been increased, and will continue to increase as time goes by. at the same time the economy is collapsing, largely because of the massive cuts and tax rises. you don't need a PHD in economics to see the problem with this and to see that greece will never be able to pay her debts. the reason this disastrous policy has been undertaken is to ensure that a) greece stays in the euro and b) to ensure that various insolvent european banks (and not just european banks in point of fact) get paid 100 cents on the euro for the bad investments they have made in greek government debt.

defaulting would be painful in the short term, but it would wipe out the unpayable debts that are strangling greece and preventing any economic recovery.

Ireland could default and be back in the markets within a couple of years but why do that? By playing the "good europeans" card the Irish banks have been recapitalised by the EU and may be seen very soon as a good place to put money - unlike the european banks heavily exposed to dodgy government debts, the economy here is starting to pick up (at least as long as the rest of the world keeps buying our exports and doesn't slip into recession) and the cost of what we are borrowing has been renegotiated down to long term rates we would be unlikely to match from the markets and may eventually be partly written off anyway.

as i've said in previous posts, ireland would be the country that would benefit most by defaulting. ireland's problem is its banks, which lost a fortune when the property bubble burst. thanks to the utter incompetence of the government, the burdens of their irresponsible loans have been passed on the irish taxpayer. ireland actually had budget surpluses before the banking crisis. if it defaulted it would again by painful in the short term, but would free the irish people from the enormous millstone they currently have around their necks and give them a real opportunity for growth. at the moment the irish economy is growing, slightly, but the medium term outlook is poor because of what is happening in europe and the united kingdom. irish bond yields are starting to rise again (10 year at 8.2% - i.e. unaffordable) and if this continues and the economy starts to falter, the irish 'rescue' will start to unravel.

i don't know if you're aware of an irish economist called morgan kelly? he has written extensively about the history of the crisis (he in fact predicted it and was told by the then irish PM that he should kill himself). i would recommend his stuff to anyone. it's well written and very informative.

the real question in ireland in my mind is why should ordinary people, including those who didn't participate in the madness that was the irish property bubble, be paying for the mistakes and bad decisions of bankers and politicians.

The only real problem is the staggering incompetence of most politicians here may well lead to the view that the EU might as well run the country since carrying on with any of the current political offerings has very little appeal.

while i agree that irish politicians have been spectacularly incompetent, the EU/ECB/IMF have been no better. in many ways they have been worse, because their bad decisions impact on a far greater number of people. i'm genuinely surprised that anyone could consider their handling the crisis competent or any way shape or form. the failed 'rescues' of greece. the 'rescues' of ireland and portugal, which could unravel just as quickly. the ill thought out, badly designed and (now we are told) too small EFSF. the laughable 'stress tests'. the creation of false markets for government debt. letting large insolvent banks hide their problems through accounting tricks. the complete and utter failure to undertake any meaningful banking reform (although clearly national governments have done nothing in this regard either). and now in 2011, italy is in trouble, spain is not too far behind, one big bank has failed, more are at risk. i could go on... but the real point is that things seem to be getting worse rather than better.

the EU/ECB/IMF's record is a catalogue of failures. they have solved none of the underlying problems and have at every turn created enormous moral hazard. they have foisted the losses on to taxpayers to protect insolvent banks and the problems are mounting every day.

[Archbob]

So, I'm intrigued by slovakia's vote to pwn itself.

[Dauphin]

you don't need a PHD in economics to see the problem with this and to see that greece will never be able to pay her debts. the reason this disastrous policy has been undertaken is to ensure that a) greece stays in the euro and b) to ensure that various insolvent european banks (and not just european banks in point of fact) get paid 100 cents on the euro for the bad investments they have made in greek government debt.

100 per cent? No one considers that credible. You're point may be valid, but don't misrepresent facts - it undermines credibility.