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Breaking News - Greece Threatens To Leave The Euro


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Icelands government didn't owe the money... it's banks did.

You're close. Really close. You see you ignore that fact that WESTERN NATIONS are dependant on international trade. Argentina have relatively limited public services and public dependancy on government services.

Lets see how well Greece survives without Oil. Or Gas. Or Medicine. All of this are brough in from abroad and buying them is impossible if every time you try to buy something the goods/funds get seized for payment of debts.

On the first part you're close. Firstly there is no method for a country to declare itself bankrupt. Then, even if a country tried passing a law to allow it, such bankrupcies would not be recognised by other countries.

Secondly, and such attemp at bankrupcy, as pointed out in your second point, wouldn't be bankrupcy as such unless the country sold ALL it's assets to try to pay it debts... technically this should include land ownership, and possibly even territorial rights or the right to levy taxation.

Look man. If they (Greeks) don't want to pony up money, or play the game anymore, who's going to make them?

There is nothing the Eurocrats and banker cabal can do but sanction them, and from what I know of Greece, they have lots of agriculture and fresh water.

I don't see how that is a worse option than having their governmental policy being subverted by these same scumbags.

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Icelands government didn't owe the money... it's banks did.

You're close. Really close. You see you ignore that fact that WESTERN NATIONS are dependant on international trade. Argentina have relatively limited public services and public dependancy on government services.

Lets see how well Greece survives without Oil. Or Gas. Or Medicine. All of this are brough in from abroad and buying them is impossible if every time you try to buy something the goods/funds get seized for payment of debts.

Greece - sunny and quite windy - why aren't they investing in solar energy and wind turbines instead of relying on imported energy? Surely they could create huge numbers of jobs (if Alex Salmond is right about Scotland's energy industry)?

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Greece - sunny and quite windy - why aren't they investing in solar energy and wind turbines instead of relying on imported energy? Surely they could create huge numbers of jobs (if Alex Salmond is right about Scotland's energy industry)?

'In Greece's fallow fields, solar energy stirs' [November 2010]:

http://www.physorg.com/news/2010-11-greece-fallow-fields-solar-energy.html

Greece is in the midst of a deep recession following the debt crisis that saw the country reach the brink of bankruptcy earlier this year.

Likewise, the PPC [state-owned electricity operator] has for too long depended on its vast supplies of lignite, a form of brown coal, to fire up its power generators.

Lignite is a major pollutant, and the PPC -- nearly half of whose electricity production comes from coal-fired plants -- is Greece's single largest offender in carbon dioxide emissions.

So the investment in solar cells in Greece, a country that has abundant sunshine throughout the year, holds out promise both to the farmers and the power company.

For the PPC, it is a chance to expunge its dirty past while helping the country meet its renewable energy quota, set at 20 percent of national electricity production by the end of the decade.

The farmers meanwhile have a chance to boost their dwindling income with a steady source of funds that no longer requires back-breaking, round-the-clock labour.

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Greece - sunny and quite windy - why aren't they investing in solar energy and wind turbines instead of relying on imported energy? Surely they could create huge numbers of jobs (if Alex Salmond is right about Scotland's energy industry)?

Good luck running those delivery trucks on solar power.

The problem with your idea is it requires massive investment. What Greece would need to do is borrow €10bn to build the facilities and related infrastructure.

Can you see a problem yet?

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I heartily approve of this sort of thing - thinking back on it, my most enjoyable thread reads have been the ones where some kindly soul has provided some fitting background music while I read.

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Just to clear this up.

If Greece dump the euro, their debts are still in euros. You can't tell your bank you are re-denominating you debt into zimbabwe dollars, then wait for the zimbabwe dollar to inflate 1000% (After a few days) then pay of your debt with worthless zimbabwe dolars.

If Greece "default" on their debts, it doesn't mean the debts "disappear". Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts of re-doniminate them.

Dumping the euro won't solve anything. Neither will default.

There is NO MAGIC BULLET.

Debts have to be paid. The alternative, eventually, is war.

So this is what the great European project comes down to is it?

Pay up, or the Wermacht rolls across Europe again.

Those of us who opposed the Euro from the beginning have been proved right once again.

:blink:

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Icelands government didn't owe the money... it's banks did.

You're close. Really close. You see you ignore that fact that WESTERN NATIONS are dependant on international trade. Argentina have relatively limited public services and public dependancy on government services.

Lets see how well Greece survives without Oil. Or Gas. Or Medicine. All of this are brough in from abroad and buying them is impossible if every time you try to buy something the goods/funds get seized for payment of debts.

Greece - sunny and quite windy - why aren't they investing in solar energy and wind turbines instead of relying on imported energy? Surely they could create huge numbers of jobs (if Alex Salmond is right about Scotland's energy industry)?

The first commercially viable LENR technology:

http://www.journal-of-nuclear-physics.com/?p=473&cpage=8

The first company with exclusive global licencing (except for the Americas) of the technology:

http://www.defkalion-energy.com/

If the above technology proves to be genuine, Greece need not worry about energy problems, nor about improving exports.

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You're close. Really close. You see you ignore that fact that WESTERN NATIONS are dependant on international trade. Argentina have relatively limited public services and public dependancy on government services.

Lets see how well Greece survives without Oil. Or Gas. Or Medicine. All of this are brough in from abroad and buying them is impossible if every time you try to buy something the goods/funds get seized for payment of debts.

Except that international isolation is not likely to be a consequence of default. You see, if greece defaults and leaves the euro, it doesn't have any more euro debt. Lets just assume for a moment that after the default, say 5 yeasr down the line it has actually sorted itself out and has a sensible government running a sensible budget.

Now, consider an investor faced between making a loan to greece, with its low debt and new found fiscal prudence, or the USA which has not changed its behaviour, who will the investor rate as the most likely candidate for default?

If greece defaults, it will only suffer long term problems with access to trade if it doesn't modify its behaviour post default. I'm skeptical that greece could manage that but the point is that the act of default does not preclude subsequent investment, what matters is whether you convince people you have changed. Russia defaulted not that long ago and has since been the recipient of plenty of international funding.

Even without future debt funding, as long as greece could export stuff the world wants it wouldn't have a problem.

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Just to clear this up.

:lol:

Here we go ....

:rolleyes:

If Greece dump the euro, their debts are still in euros. You can't tell your bank you are re-denominating you debt into zimbabwe dollars, then wait for the zimbabwe dollar to inflate 1000% (After a few days) then pay of your debt with worthless zimbabwe dolars.

If Greece "default" on their debts, it doesn't mean the debts "disappear". Just like if you miss a credit card payment, if you don't pay, the debt is still their, you just get charged late payment fees.

Only the creditor can choose to wipe out the debts of re-doniminate them.

Dumping the euro won't solve anything. Neither will default.

There is NO MAGIC BULLET.

Debts have to be paid. The alternative, eventually, is war.

Does Greece owe all its debt to one militarily powerful sovereign state then or perhaps owes a huge part of its debt to such a power? If so, then there might be war as that state tries to reclaim what it is owed.

Otherwise, a state defaulting does indeed mean that the debts have 'disappeared'. As for your credit card analogy, what do you think happens when you are declared bankrupt by a court :lol:

Certainly there is no total magic bullet but when you are overwhelmed with debt, default is indeed one of the options you should be seriously considering. There will be consequences, mainly short and medium term. Long term it can often make a lot of sense.

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Except that international isolation is not likely to be a consequence of default. You see, if greece defaults and leaves the euro, it doesn't have any more euro debt. Lets just assume for a moment that after the default, say 5 yeasr down the line it has actually sorted itself out and has a sensible government running a sensible budget.

Now, consider an investor faced between making a loan to greece, with its low debt and new found fiscal prudence, or the USA which has not changed its behaviour, who will the investor rate as the most likely candidate for default?

You don't seem to be able to comprehend basic facts.

Not paying debt doesn't make it go away. It's still there.

5 years down the line, Greece will still owe the money.

You seem to think that default=bankrupcy.... it doesn't.

In bankrupcy, you creditors accept you wont be able to pay off the debts, AND DIVIDE UP YOUR ASSETS, agreeing to effectively write off the shortfall a few years later. Default is simply you telling your creditors that you wont pay. The creditors would probably sell the debts on at a lower value to a company that specialises in unpaid state debt who will chase the debt through court seizing assets and fund accross the world.

We know this because it happens all the time in Africa and Asia.

Best chance you have then is to try to buy the bonds back on the secondary market at a lower rate.

Alternative, Greece could sell assets including territorial rights off and use the money to pay off the debt.

I imagine turkey would be interested in buying their way out of the cyprus issue by buying the other half along with the rest of the greek islands, and russia would find a small section of the mainland handy for a mediterainian port next to the middle east... maybe that big bit that's nearly an island west of Athens. So you see, despite all the crap on here about not being able to pay, they in fact CAN pay, they just CHOOSE not to as it would cause hardship. It's the same as Ireland. They could pay, they just DON'T WANT TO as the idea of suffering to pay their debts seems impossible to people who've enjoyed 2 decades of living the high life by running up massive debts.

The difference between Greece and the woman who runs up £80k on her credit cards is Greece DOES HAVE THE ASSETS TO SELL to pay the debt off.

Edited by RufflesTheGuineaPig
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You don't seem to be able to comprehend basic facts.

Not paying debt doesn't make it go away. It's still there.

5 years down the line, Greece will still owe the money.

You seem to think that default=bankrupcy.... it doesn't.

In bankrupcy, you creditors accept you wont be able to pay off the debts, AND DIVIDE UP YOUR ASSETS, agreeing to effectively write off the shortfall a few years later. Default is simply you telling your creditors that you wont pay. The creditors would probably sell the debts on at a lower value to a company that specialises in unpaid state debt who will chase the debt through court seizing assets and fund accross the world.

We know this because it happens all the time in Africa and Asia.

Best chance you have then is to try to buy the bonds back on the secondary market at a lower rate.

Sovereign debt is just a 'promise' to pay.

It ain't 'secured' on assets as such. It's just some bits of paper.

If Greece say they're not paying their creditors can do whatever they like with the bits of paper. They can sell them to Mrs Merkin, sell them to the ECB, China, whatever.

But they're still nothing more than promises on bits of paper.

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Ruffles, what I am saying is that what you are saying only makes sense if all the creditors and potential future creditors agree to gang up and

never lend anything to the greeks again.

Of course such consensus doesn't exist and a new investor who has not suffered a greek haircut previously will judge the new post default investment

opportunity as a brand new opportunity. He may well take into account the prior default but if he sees that the situation is now different

and offers a good chance for profit he won't consider the feelings of the previously burned creditors.

There is ample evidence for this behaviour in sovereign defaults in the past.

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Sovereign debt is just a 'promise' to pay.

It ain't 'secured' on assets as such. It's just some bits of paper.

If Greece say they're not paying their creditors can do whatever they like with the bits of paper. They can sell them to Mrs Merkin, sell them to the ECB, China, whatever.

But they're still nothing more than promises on bits of paper.

Bits of paper which courts in all the other countries recognise as valid.

We've seen this before in africa many times. The new creditors seize the countires assets in other countries. Lets see how well Greece does with ZERO trade. If it tries to buy oil, the money it tries to send to the UK to pay for it is seized, or if the money makes it into the UK oil companies bank accounts, the oil is seized.

If the EU tried to send finacial aid to Greece, the money get seized. Happens all the time.

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Ruffles, what I am saying is that what you are saying only makes sense if all the creditors and potential future creditors agree to gang up and

never lend anything to the greeks again.

Of course such consensus doesn't exist and a new investor who has not suffered a greek haircut previously will judge the new post default investment

opportunity as a brand new opportunity. He may well take into account the prior default but if he sees that the situation is now different

and offers a good chance for profit he won't consider the feelings of the previously burned creditors.

There is ample evidence for this behaviour in sovereign defaults in the past.

You'r right. Greece could trade with Syria, Iran and Libia and... I don't know, Cuba? Zimbabwe?

Good luck with that.

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Bits of paper which courts in all the other countries recognise as valid.

We've seen this before in africa many times. The new creditors seize the countires assets in other countries. Lets see how well Greece does with ZERO trade. If it tries to buy oil, the money it tries to send to the UK to pay for it is seized, or if the money makes it into the UK oil companies bank accounts, the oil is seized.

If the EU tried to send finacial aid to Greece, the money get seized. Happens all the time.

It doesn't matter a fig what other countries courts do or don't do.

If the Greek govt. sticks two fingers up at its bond holders that's that. They can either tell them they're taking haircuts, they're not getting interest, they're getting less interest, they're extending maturities or whatever.

Greece is a sovereign country and can do whatever it wants. *

How bondholders decide to respond is up to them of course, but if Germany goes to war against Greece over a few billions in bad investments then we're into something a little different aren't we.

Edit: Unless it turns out somewhere in Maastricht or Lisbon or wherever that Greece in fact is no longer a sovereign nation but is in fact already just a suburb of Germany.

Edited by Red Karma
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Bits of paper which courts in all the other countries recognise as valid.

We've seen this before in africa many times. The new creditors seize the countires assets in other countries. Lets see how well Greece does with ZERO trade. If it tries to buy oil, the money it tries to send to the UK to pay for it is seized, or if the money makes it into the UK oil companies bank accounts, the oil is seized.

If the EU tried to send finacial aid to Greece, the money get seized. Happens all the time.

What if the transaction has nothing to do with either state (i.e. it's a private sector transaction)?

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Sovereign debt is just a 'promise' to pay.

It ain't 'secured' on assets as such. It's just some bits of paper.

If Greece say they're not paying their creditors can do whatever they like with the bits of paper. They can sell them to Mrs Merkin, sell them to the ECB, China, whatever.

But they're still nothing more than promises on bits of paper.

its same as bankruptcy effectively. Bondholders get knocked.

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I would hazard a guess that the greatest investment in a post-default greece will be from those same institutions that have been playing the peripheral yield game of late. The losses have not been borne by the lenders, but by taxpayers at large. Great trade. Where there is money to be made in [accidently or knowlingly] mispricing risk, privatising gains and socialising losses it will be repeated.

Agreed.

I think we need a state to default and throw the losses back onto the risk takers. Quickest way to cancel out the moral hazard issue.

To a certain extent the Greeks may already be in default. They are reportedly buying back some of their own debt at 40 to 50% discount, in effect cancelling it. Seems that they have decided to use some of the EU money to reduce the medium term problem. Bondholders who are capitulating are giving the Greeks a chance to default without actually saying so.

Sooner or later someone will find out the risk takers...

Edited by FTBagain
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It doesn't matter a fig what other countries courts do or don't do.

If the Greek govt. sticks two fingers up at its bond holders that's that. They can either tell them they're taking haircuts, they're not getting interest, they're getting less interest, they're extending maturities or whatever.

Greece is a sovereign country and can do whatever it wants. *

How bondholders decide to respond is up to them of course, but if Germany goes to war against Greece over a few billions in bad investments then we're into something a little different aren't we.

Edit: Unless it turns out somewhere in Maastricht or Lisbon or wherever that Greece in fact is no longer a sovereign nation but is in fact already just a suburb of Germany.

I agree.

Countries have defaulted aplenty in the past and as soon as there is a change in circumstances, a chance to make money, 'investors' pile in. Some are already moving to invest in Zim for Gods sake, "not for the faint hearted" according to MoneyWeek. So for Greece it is all about, pride and pain. Which option is the least painful, pay up or default and does that pain out way national pride. I suspect we are getting very close to the pain limits.

Anyway there are already suggestions that they are buying back their paper at huge discounts on the open market, in effect cancelling the debt at well below face value - default in all but name.

Edited by FTBagain
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http://www.telegraph.co.uk/finance/economics/gilts/8503345/Greece-angered-by-SandP-rating-cut.html

Greece angered by S&P rating cut

Investors in Greek debt may have to write-off 50pc of their loans "or more" if financial stability is to be restored to the beleaguered country, a leading rating agency warned.

I read this and then seem to feel this is what Greece wants, and the protesting is merely a charade....

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Joining the Euro was a chance for Greece to prove it was not a basket case. If it defaults it will have failed and will be deemed a basket case for a long time. As people say they can choose not to pay their debts, but they will find life even harder when nobody wants to accept their new currency and nobody will lend them any money. They would be better off not defaulting. They do have assets to sell if they so choose, so they could pay if they wanted to.

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Iceland are not having their imports seized are they?

They may be pariahs of the modern world and exist on Terror watch lists around the world but its pretty much business as usual (albeit poorer business) in Reykjavik!!

Anyway lets chuck this into the mix. If Greece exits the Euro they still remain a member of the EU. Therefore the charter applies particular the one listing Human Rights.

Clearly any nation that has been stiffed could/would refuse to trade with them but Greece on issue of a new bond structure could 'shop elsewhere'.

How can other those Euro nations (those owed money) seize imports when those same products are essential to maintain human life? Medicine and foodstuffs and the like?

Granted history has told us these things usually end in war but if it ever gets so far then the Euro currency and the EU will have already have fallen far by the wayside.

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