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Breaking News - Greece Threatens To Leave The Euro


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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.

Where do you get these absurd idea's from?

When oil is imported it is imported by companies/individuals not the state. Thus not subject to seizure. The same with the vast majority of trade. The trade drop off arising from default is due to the likelihood of not being paid back, and has nothing to do with asset seizure.

That is not to say foreign creditors cannot go after non-domestic state assets, they certainly can, but the value of those is extremely minimal.

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But if a default really is so painless why haven't the Greek government done it by now? There must be something stopping them.

Yeah, it's the desire for the politicos to keep the gravy boat topped up and the banksters to pretend they aren't all bust.

Not to fret they are busy printing themselves into irrelevence already.

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Where do you get these absurd idea's from?

When oil is imported it is imported by companies/individuals not the state. Thus not subject to seizure. The same with the vast majority of trade. The trade drop off arising from default is due to the likelihood of not being paid back, and has nothing to do with asset seizure.

That is not to say foreign creditors cannot go after non-domestic state assets, they certainly can, but the value of those is extremely minimal.

The main asset the state has is the taxpayer. I don't think abduction is an option, tbh! ;)

Ultimately, lending to a state isn't secured on anything. Investors are just speculating on the ability of the taxpayers to pay it back, or rather the strength of the state to force repayment.

Does anyone know of any precedence for non-state assets being seized, in leu of state repayments?

Edited by Traktion
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But if a default really is so painless why haven't the Greek government done it by now? There must be something stopping them.

It's not painless, but is probably the better of two evils. It's certainly more of a gamble though, which could be why the politicians don't like it.

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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.

If someone were to lend me a few million I would have no problem with default. It's not my problem because I have the money, it's the lenders problem. I could not care less about my credit rating because I don't have one. I save up for what I want. I worked and saved and even bought my house using cash. If someone wants to do business, they can ask for cash on delivery, I will even pay in gold if requested. Greece can do likewise. The ones with the problem are the German and French banks. It is why Euroland is so keen to bale them out.

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Don't worry apparently it is all okay and the plans are working well...

Thats the message from Stephanie Flanders at the BBC

As far as I can tell this is not some sort of joke she actually means it!

Kicking the can down the road seems to equal success...Muppets!

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I think i would be moving my euros out of the euro and into anything else.

My euros are staying right where they are. Despite the euro's appreciation against sterling and the dollar over the last few years (which has served me well), the Eurozone's trade deficit is still dwarfed by that of the US and UK. The ECB has also shown itself to be far more hawkish than the Fed or BoE when it comes to supporting its currency. Whatever happens in Greece, the euro will survive and is likely to continue to remain relatively strong.

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Feck. What a mess.

But the bailouts will continue. The debt will increase. The taxpayers will foot the bill but only after all the assets of the weaker countries have been transferred to banks and bond holders. After ever last drop has been squeezed then the pretend money, created out of thin air, will be monetized. Then the banks and bond holders will present the public with a bill they can never, ever pay.

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Just watching Paxman on Newsnight. He was talking about the latest Greek bailout. Trouble was he had three bankers in the studio, and they all wanted a bailout. Not one guest with the opposite view.

Paxman asked them, "why should taxpayers lend them more money, when you bankers won't?".

They had no real answer, and just threatened a financial collapse if it wasn't done.

Shambles. Good questioning from Paxo though.

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On the first part you're close.

On the first part I was trying to dispel what seemed to me to be a slightly misleading point about personal debt.

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
.

I agreed that missing a payment didn't cancel the debt, but pointed out the difference between that and personal bankruptcy. There is, of course, commercial bankruptcy too. In the US there is, I believe, "Chapter 11" bankruptcy which allows a company to apply for protection from its creditors while it tries to restructure its affairs - companies have been known to come out of Chapter 11 arrangements and resume normal trading.

I did not say that bankruptcy in the way that it is practised in English law (and in other legal systems too, though I know little about the details) applied to countries. There is a problem of terminology, since in popular parlance the word "bankrupt" is used for a variety procedures, official, legal, informal and even metaphorical - "This is a bankrupt ideology," "he is using clever tricks to hide a bankruptcy of real creativity," etc etc.

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 bankruptcies would not be recognised by other countries.

Secondly, and such attempt at bankruptcy, as pointed out in your second point, wouldn't be bankruptcy 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.

A country cannot declare itself bankrupt in the same way that an individual or a company can, and even if it could there is no reason to suppose that it would chose to do so under the exact provisions of English Law. That does not mean that it has no other ways of dealing with the crisis of running out of money. It also does not mean that those commenting on the problem will not describe it as the country "going bankrupt" even if the technical term is incorrect.

What sovereign states do is a little different, and depends on the state and the date about which you are talking. For example the debts of Philip II of Spain (whose affairs were described in the FT articles which I referenced) were (I think - it's been a lot of years since I studied this) theoretically personal debts, since he owned Spain. But he did not declare himself bankrupt and come to an agreement with his creditors. He said to the various people to whom he owned money (the Fuggers of Germany come to mind, though that may be me mixing him up with someone else), "I am not going to repay this money - neither the interest nor the capital." What I do not suppose he said, but was implied, was "and what are you proposing to do about it?" The answer, of course, was "Nothing." They couldn't say that they were going to come and attach El Escorial and flog it off to some other monarch.

What Philip did is usually described as "repudiating his debts." In theory this has bad consequences, since one would assume that international bankers would no longer be prepared to lend him money, or only do so at a crippling interest rate. If you are indulging in activities like warfare (a Philip was, some internal to his territories like the Dutch Revolt, and some external like the failed invasion of England) and palace building, then you are going to have to stop these activities or find more money. Finding more money usually involves borrowing from somewhere and this, it is presumed, is where the penalties of repudiating your debts arises. Since Philip kept on fighting and kept on repudiating his debts, we may assume he managed to find someone to lend him money. Either bribery or blackmail may have been involved - I'd have to check in books not to hand.

Sometimes a state gets round this by "forced loans" - one of the practices that got Charles I into trouble (again IIRC). But then I think it was assumed that he didn't intend to repay them. And putting "Forced loan" in Wiki produced this interesting bit of financial history

In 1171, the authorities of the Republic of Venice, concerned about their war-depleted treasury, drew a forced loan from the citizenry. Such debt, known as prestiti, paid 5 percent interest per year and had an indefinite maturity date. Initially regarded with suspicion, it came to be seen as a valuable investment that could be bought and sold. The bond market had begun.

From 1262 to 1379, Venice never missed an interest payment, solidifying the credibility of the new instruments. Other Italian city-states such as Florence and Genoa became bond issuers as well, often as a means of paying for warfare. Bonds were traded widely in Italy and beyond, a business facilitated by bankers such as the Medici.

Wiki: Stock Exchange

Of course government bonds aren't always the most reliable of investments - you can get rid of the debt they represent by saying that you've overthrown the previous government gets rid of its debts via a revolution - when the Communists took power in 1918-20 the bonds issues by the Czarist government became worthless except as souvenirs or works of art.

More recently some governments have taken the course of a temporary suspension of loan re-payments, but as these too are usually not a negotiated suspension, but an unilaterally declared one, they too can amount to a default on sovereign debt. The various Latin American crises of the 1990s come to mind - some amounted to full-scale default, some not. Here the difference is the presence of the IMF and the World Bank. It is held that simply allowing an entire country to have no money at all is bad for the whole of the world economy (especially as these things are contagious - vide the Euro zone) and so IMF loans are wheeled on to save the economy. This is the point at which the inter-connectedness of the the global economy makes a simple withdrawal from the credit market of even one country a problem for all. But despite the presence of a kindly old uncle (or a wicked stepmother, depending on your point of view) this is something very close to national bankruptcy.

Of course the other option is inflation in the currency in which the debt is calculated - again, I think some of the Argentine debt was calculated in pesos.

Finally we come to the Greek position which, if they could devalue the drachma and simply unilaterally suspend their debts whilst getting large loans from the IMF, they could keep on acting much as they have been. I suspect that the Greek unions believe that the Americans (who they hate much more than they hate the Germans - why I don't know) are pulling all the strings to make Greeks suffer, whereas in truth the Yanks are much more worried about their own suffering than anyone else's right now.

[sorry, too tired to proof read and edit down]

db

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Bloody hell - Ireland next?

Possibly, but this time I think the Greeks were creating a drama out of a crisis. They're good at it. That news story is now (11 May) old news, and I presume that the threats of end of the world as we know it produced some of the desired results.

db

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FTSE 100 bounces on hopes for second Greek rescue

Banks recovered ground as fears about contagion from a Greek debt default diminished following Standard & Poor's decision to downgrade the Hellenic nation's sovereign rating on Monday, when it warned that creditors could lose 50pc-70pc of their investment.

Reports that Brussels is prepared to bolster the €110bn (£97bn) rescue agreed last year with a further €60bn to tide the stricken country over in 2012 were not confirmed, but sources said Europe's politicians are agreed on the economic logic of a second package.

Still at least another bailout will fix the problem, clearly they didn't throw enough money at the problem....

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FTSE 100 bounces on hopes for second Greek rescue

Still at least another bailout will fix the problem, clearly they didn't throw enough money at the problem....

There was an Irishman (I think a politician) on R4 yesterday, saying very bluntly that countries with debts like Greece and Ireland always default in the end, there's simply no other practical option, and that default they most certainly will.

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FTSE 100 bounces on hopes for second Greek rescue

Still at least another bailout will fix the problem, clearly they didn't throw enough money at the problem....

Indeed. The only thing that will solve the problem is haircuts all round. And soon. Not more debt. Or one of these countries needs to take the lead and step out the Euro and start again.

Edited by needsleep
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Just watching Paxman on Newsnight. He was talking about the latest Greek bailout. Trouble was he had three bankers in the studio, and they all wanted a bailout. Not one guest with the opposite view.

Paxman asked them, "why should taxpayers lend them more money, when you bankers won't?".

They had no real answer, and just threatened a financial collapse if it wasn't done.

Shambles. Good questioning from Paxo though.

Chilling viewing. They were only focused on one thing and that was the survival of their institutions that are profiting from the financial chaos. After watching that I'm not sure they actually view the public as real living people.

How have we got to the point where private banks are blatantly stealing from the public, stripping countries of assets.

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I find it fairly amusing that the “markets” rally on another Greek bailout. Nothing is solved Greece’s debt get’s €60bn larger to nearer €400bn.

On top of that there will be more austerity to reduce the ability of the Greeks to pay the money back. The debt spiral will be made far worse. Could you make this up?

There is no plan to pay back the debt; there is no plan for the Greek economy to grow. When the end comes it will no doubt be explosive and everyone will claim they did not see it coming, genius.

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I find it fairly amusing that the “markets” rally on another Greek bailout. Nothing is solved Greece’s debt get’s €60bn larger to nearer €400bn.

On top of that there will be more austerity to reduce the ability of the Greeks to pay the money back. The debt spiral will be made far worse. Could you make this up?

There is no plan to pay back the debt; there is no plan for the Greek economy to grow. When the end comes it will no doubt be explosive and everyone will claim they did not see it coming, genius.

Can there be any doubt whatsoever that they are going to print into oblivion?

State failures all accross the western hemisphere.

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Chilling viewing. They were only focused on one thing and that was the survival of their institutions that are profiting from the financial chaos. After watching that I'm not sure they actually view the public as real living people.

How have we got to the point where private banks are blatantly stealing from the public, stripping countries of assets.

It was must watch TV. Mason the economist was clueless when pressed by Paxman. I wonder whether or not I should complain to the BBC, as the only balance in the interview with the 3 bankers was Paxman. Mind you he did a good job. You could tell he was incandescent with rage at the line Mason and the bankers were spinning, that we had to do this or else it would be even worse for the taxpayers. Only as a presenter, he couldnt directly put his opposite view across. I bet he was also mad because they didnt have someone who understood the criminality involved in what was going on, who could have provided a counter view.

Despite that, he put some great questions across. Why should the UK taxpayer lend even more money to Greece, a nation that lied about its finances, when you bankers wont do so other than at a much higher rate of interest? - Pity he didnt point out that it was the bankers who set up the fraudulent schemes to allow the Greek government to lie.

As usual, taxpayer and pension scheme members will get the bill for all of this.

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