billybong Posted January 31, 2015 Share Posted January 31, 2015 (edited) http:// www.zerohedge.com/news/2015-01-29/putins-unexpected-victory-germany-furious-greece-now-russian-sanctions-veto Two days ago, Zero Hedge first, and shortly thereafter everyone else, pointed out something stunning: the biggest surprise to emerge so far out of the new anti-Troika/austerity Greek government was not so much its intention to proceed with the first test of "Odious Debt" - this was largely known in advance - but its dramatic pivot away from Germany and Europe, and toward Russia. Apart from the eu's apparent attempts to renege on the veto agreement it's interesting that Greece is considering an "Odious Debt" test. The test might have been known about in advance but it doesn't seem to have been very widely publicised. http:// en.wikipedia.org/wiki/Odious_debt In international law, odious debt, also known as illegitimate debt, is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion. Edited January 31, 2015 by billybong Quote Link to comment Share on other sites More sharing options...
frederico Posted January 31, 2015 Share Posted January 31, 2015 How? Greece can`t pay it`s debts, no way, ever. An IVA Quote Link to comment Share on other sites More sharing options...
Silverfinger Posted January 31, 2015 Share Posted January 31, 2015 (1) At any time, debt can only ever be worth what the debtors can legally and practically be forced to pay, say, an amount X. (2) As such, if the debt is traded in a rational market, the debtors can at any time voluntarily buy back their debt at market value X, since they have assets or cash flows of that market value at their disposal. (3) Therefore, a debtor can never be truly bankrupt, and bankruptcy can only be explained as a misperception of the market or the creditors of the debtors' ability to pay back, for instance out of irrationality, or lack of information. Summary: Debtors can always pay the fair value of their debt. Quote Link to comment Share on other sites More sharing options...
happy_renting Posted February 1, 2015 Share Posted February 1, 2015 Doesn't Germany still owe Greece billions in agreed war reparations? Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted February 1, 2015 Share Posted February 1, 2015 Doesn't Germany still owe Greece billions in agreed war reparations? Not any more. Quote Link to comment Share on other sites More sharing options...
Silverfinger Posted February 1, 2015 Share Posted February 1, 2015 http://www.spiegel.de/wirtschaft/unternehmen/griechenlands-banken-koennten-bald-notfallreserven-brauchen-a-1015996.html Greek bank manager saying that they need an agreement soon, otherwise they'll end up like "North Korea". Apparently, at the current rate of deposit outflows, Greek banks will need "Emergency Liquidity Assistance (ELA)" in two weeks time. IMO, Syriza missed the chance to freeze all deposits and introduce NewDrachma. Now they'll possibly end up like those central African states that also effectively run on the Euro. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 1, 2015 Share Posted February 1, 2015 nah, those banks can sell their capital assets...that IS what they are for, to prevent insolvency...isnt it. Quote Link to comment Share on other sites More sharing options...
Silverfinger Posted February 1, 2015 Share Posted February 1, 2015 ... or the Euro group caves in and forgives a lot of debt. But how to explain that to the electorate? They might not want to do that, which means it is the African/North Korean way for Greece. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 1, 2015 Share Posted February 1, 2015 capital outflows is somewhat different to debt repayment and require a different policy. Banks should cease trading the moment they suspect they are insolvent, just like any other business. Banks are more concerned with their loss of status than they are about legality. Quote Link to comment Share on other sites More sharing options...
R K Posted February 1, 2015 Share Posted February 1, 2015 Doesn't Germany still owe Greece billions in agreed war reparations? They never went to war. They never killed millions of people or destroyed millions of families They never stole land or resources from anyone They never had their own war debts written off There was no Marshall Plan But we must be sensitive to the fact that they hyperinflated themselves 90 years ago Quote Link to comment Share on other sites More sharing options...
R K Posted February 1, 2015 Share Posted February 1, 2015 Nassim NicholنTaleb @nntaleb 16h16 hours ago Greece: when there is a mistake both the lender and the borrower should pay a price, not just the borrower. Quote Link to comment Share on other sites More sharing options...
R K Posted February 1, 2015 Share Posted February 1, 2015 (edited) A Evans-Pritchard @AmbroseEP 13h13 hours ago Tsipras olive branch to IMF & ECB changes nothing. Never was going to default to IMF. Probs with ECB start on 28 Feb anyway if not in Troika A Evans-Pritchard @AmbroseEP 1h1 hour ago @NYTimeskrugman "Is Germany really prepared to tell fellow EU democracy, “Pay up or we destroy your banking system?” http://www.nytimes.com/2015/01/30/opinion/paul-krugman-europes-greek-test.html?_r=0 … A Evans-Pritchard @AmbroseEP 1h1 hour ago Joschka Fischer: "Greece’s election an unambiguous defeat for Merkel/austerity strategy" Germ will have to capitulate http://www.project-syndicate.org/commentary/syriza-greece-eu-crisis-by-joschka-fischer-2015-01#EHZdbY8jKYe9ZWmJ.99 … US always wanted EZ to sort their own mess out. IMF debt will stand - Tsipras ok with US/IMF. Its Merkel who has stupidly isolated herself and germany listening to Schauble / Weidmann Edited February 1, 2015 by R K Quote Link to comment Share on other sites More sharing options...
Limon Posted February 1, 2015 Share Posted February 1, 2015 Its Merkel who has stupidly isolated herself and germany listening to Schauble / Weidmann She's not isolated though - Netherlands, Finland, and Rajoy have all taken similar stances. Unless both France and Italy take Syriza's side, hard to see her losing this one. Quote Link to comment Share on other sites More sharing options...
Limon Posted February 1, 2015 Share Posted February 1, 2015 Doubleposting because I can't edit: also, Krugman's title is very inaccurate; it's not "pay up or we destroy your banks"; those banks are already insolvent. It's "pay up or we stop propping up your zombies." Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted February 1, 2015 Share Posted February 1, 2015 (edited) She's not isolated though - Netherlands, Finland, and Rajoy have all taken similar stances. Unless both France and Italy take Syriza's side, hard to see her losing this one. How can she win it, they either get terms that suit them or it will be a default. Much as this is being talked down as "non systemic" now, there are going to be unpleasant consequences for markets and the EZ if it happens? Edited February 1, 2015 by dances with sheeple Quote Link to comment Share on other sites More sharing options...
frederico Posted February 1, 2015 Share Posted February 1, 2015 Exactly, if the eurozone doesn't help its members, what's the point Quote Link to comment Share on other sites More sharing options...
billybong Posted February 1, 2015 Share Posted February 1, 2015 (edited) Exactly, if the eurozone doesn't help its members, what's the point +1 Also to say not only does that point apply to the eurozone it also applies to the eu as a whole. Indeed that point was made in a government pamphlet before the UK vote on the Common Market in 1975 http:/ /www.harvard-digital.co.uk/euro/pamphlet.htm The aims of the Common Market are: To bring together the peoples of Europe. To raise living standards and improve working conditions. To promote growth and boost world trade. To help the poorest regions of Europe and the rest of the world. To help maintain peace and freedom. Some would say it's failed on most if not all of the above counts - and massive debt, money printing and theft from pensions and savings and all the rest wasn't mentioned either. Edited February 1, 2015 by billybong Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted February 1, 2015 Share Posted February 1, 2015 Exactly, if the eurozone doesn't help its members, what's the point So it's members are basically allowed to do whatever they want, no matter how stupid, and the EZ bails them out ? I don't think that maybe the Germans and the Greeks are as far apart on this as most people think. The Germans want structual reforms of the Greek economy and so do Syriza. The irony being that Syriza is more likely to turn the Greek economy into one modelled on the German system than the outgoing government was. As for the german view prevailing in the EZ, irrespective of whether it is right or not, I note that in population terms, if you add up the Germans, Finns, Austrians, Dutch and a few other of the recently joining countries (who are probably not so keen to shell out loads of money to save a dysfunctional Greek economy), the Germans have probably got the mandate in EZ population terms. It would only take France, Italy or Spain to support them to make it a clear majority. Quote Link to comment Share on other sites More sharing options...
rollover Posted February 1, 2015 Share Posted February 1, 2015 nah, those banks can sell their capital assets...that IS what they are for, to prevent insolvency...isnt it. What? Set a precedent! Some could face a nasty surprise about their EU joint finances. Quote Link to comment Share on other sites More sharing options...
Limon Posted February 1, 2015 Share Posted February 1, 2015 Some would say it's failed on most if not all of the above counts - and massive debt, money printing and theft from pensions and savings and all the rest wasn't mentioned either. What quantitative data is there to suggest it's failed by any of those criteria? It's hard to see how you'd objectively assess "bringing together the peoples of Europe", but living standards and working conditions have unequivocally increased across Europe since the mid-70s (especially in Eastern and Southern Europe), growth and trade have likewise expanded immensely, Europe's poorest regions have come a long way towards catching up with northern Europe, and as for peace and freedom, well, it's been a good long while since the last European war and all of the dictatorships and juntas have fallen. Quote Link to comment Share on other sites More sharing options...
happy_renting Posted February 1, 2015 Share Posted February 1, 2015 What quantitative data is there to suggest it's failed by any of those criteria? It's hard to see how you'd objectively assess "bringing together the peoples of Europe", but living standards and working conditions have unequivocally increased across Europe since the mid-70s (especially in Eastern and Southern Europe), growth and trade have likewise expanded immensely, Europe's poorest regions have come a long way towards catching up with northern Europe, and as for peace and freedom, well, it's been a good long while since the last European war and all of the dictatorships and juntas have fallen. Recall that only a couple of years ago, the Greek PM felt it necessary to sack all his military leaders. Greece was a military dictatorship until the mid-1970s, and if the military feels it is necessary to 'step in' it's game over for Greece's EU membership, never mind Eurozone membership. Spain still suffers from the hangover of Franco's era. It's at times of extreme financial crisis and instabilty that miltary takeovers often occur. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted February 1, 2015 Share Posted February 1, 2015 Are they free yet? Quote Link to comment Share on other sites More sharing options...
Silverfinger Posted February 1, 2015 Share Posted February 1, 2015 IMF debt will stand - Tsipras ok with US/IMF. Its Merkel who has stupidly isolated herself and germany listening to Schauble / Weidmann Why is that so stupid? The best solution for Greece is to default and re-introduce a new own currency. The challenge is to do that as socially acceptable as possible. There the EU can help. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted February 1, 2015 Author Share Posted February 1, 2015 Debt-addicted Greece must go cold turkey, says finance minister Greece insists it will pay creditors as it hires debt advice Three myths about Greece's enormous debt mountain Eurozone breakup threat reaches all-time highEurozone headed for 'protracted' deflation: prices suffer record drop Quote Link to comment Share on other sites More sharing options...
Silverfinger Posted February 1, 2015 Share Posted February 1, 2015 Exactly, if the eurozone doesn't help its members, what's the point There is a very big point: easier trade finances. Easier travel of goods and people. The nice thing about a strong currency is that the rotten banks etc. are allowed to default, which tidies up the system and keeps it healthy. We should all welcome banbkruptcies of failed entities, and the people who put money in them should lose it. Anything else leads to moral hazzard and the fantastic kind of mess that we are seeing now. As for the currency itself, it would make much more sense to use gold... Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.