Greece Is Slipping Into The Abyss

[Bloo Loo]

You've got £50k worth of stuff (or more likely £20k worth of stuff you just paid £50k for) and two ious' have been created.

One iou is between you and the bank, the other iou is between the bank and the vendor.

If you don't pay, the bank still has to. Because the bank didn't have anything of value in the first place, this system can only lose money and waste resources.

hence the stated NEED for 2% inflation.

Its not for us, the nation, its to keep the banks going. Its a fraud to protect an unneccesary sector in silk and gold.

[Injin]

hence the stated NEED for 2% inflation.

Its not for us, the nation, its to keep the banks going. Its a fraud to protect an unneccesary sector in silk and gold.

The inflation is new money creation to pay for old debts, yes.

The genius of this is there is no way for the public to ask for an interest rate to cover inflation because inflation is impossible to predict unless you know how many people will ask for their cash to be removed from the banking system entirely.

Whoever came up with it has a mind like a pretzel.

[Bloo Loo]

The inflation is new money creation to pay for old debts, yes.

The genius of this is there is no way for the public to ask for an interest rate to cover inflation because inflation is impossible to predict unless you know how many people will ask for their cash to be removed from the banking system entirely.

Whoever came up with it has a mind like a pretzel.

probably was a pretzel.

[Gone baby gone]

How do you begin to tackle it?

I would say, stop giving them money via bailouts, and start a managed default. Greece leaves the Euro and must make provisions to start it's own currency.

Fact is, the Greek govt. can say and promise what it likes, but if the population en masse sticks two fingers up, they can't put the whole lot of them in prison.

If they want schools, police, roads and other infrastructure, they'll need to pay. If they don't like taxes, that's OK, the services will be left to collapse and others will start offering these services privately to those who can afford them, OR a "strongman" takes control of the country and they slip into third world country status over a process of 30-40 years in the style favoured by many African republics.

[Injin]

When they say European banks are exposed to Greece, they haven't lent the money directly to Greeks to buy imports.

Typically they have bought bonds - sovereign debt or private debt and lent money to Greek banks (or even owned them in the case of Soc Gen for instance).

The money has been spent into the economy by the process of credit creation...in terms of government that would have been paying wages for instance that they couldn't have otherwise afforded, or, in terms of the banks, it would largely have entered the economy through the process of secured lending.

Credit isn't money.

Then once the money is in the economy, much of it has leaked out again (from places like those public sector wages and the now booming property market) in the form of buying stuff, much of which has been made abroad.

So, yes, the process does involve creating wealth in the economy too, but in the long run, if money leaks out via the trade route then they end up in a very bad place. (not dissimilar to our own position)

Credit isn't money.

When the credit runs out, prices fall back to where they always should have been. All that is lost are dreams. But ofc, that's got it's own problems if you've been using dreams to get people to empty your bins and police your streets, doesn't it?

[Bloo Loo]

When they say European banks are exposed to Greece, they haven't lent the money directly to Greeks to buy imports.

Typically they have bought bonds - sovereign debt or private debt and lent money to Greek banks (or even owned them in the case of Soc Gen for instance).

The money has been spent into the economy by the process of credit creation...in terms of government that would have been paying wages for instance that they couldn't have otherwise afforded, or, in terms of the banks, it would largely have entered the economy through the process of secured lending.

Then once the money is in the economy, much of it has leaked out again (from places like those public sector wages and the now booming property market) in the form of buying stuff, much of which has been made abroad.

So, yes, the process does involve creating wealth in the economy too, but in the long run, if money leaks out via the trade route then they end up in a very bad place. (not dissimilar to our own position)

Ok, lets run with that.

Private debt in Greece is barely affected....thats a contract between two private entities....and they could be Greek banks. This is not at issue here.

As for the Soveriegn debt, that was ALL for public sector spend....thats why they issue the bonds...they run out of tax intake to pay last years bonds and todays wage bills and UK Plane spotters prosecutions.

Of course, much tax intake is from the same public sector they spent on last month...snake eating tail comes to mind, but Hey Ho, it all adds to GDP.

[Rare Bear]

hence the stated NEED for 2% inflation.

Its not for us, the nation, its to keep the banks going. Its a fraud to protect an unneccesary sector in silk and gold.

In fact the 2% or whatever% inflation is there both to reduce government debt and as a wealth tax.

[Rare Bear]

Ok, lets run with that.

Private debt in Greece is barely affected....thats a contract between two private entities....and they could be Greek banks. This is not at issue here.

As for the Soveriegn debt, that was ALL for public sector spend....thats why they issue the bonds...they run out of tax intake to pay last years bonds and todays wage bills and UK Plane spotters prosecutions.

Of course, much tax intake is from the same public sector they spent on last month...snake eating tail comes to mind, but Hey Ho, it all adds to GDP.

Which of course says that GDP is no measure of real economic activity.

[ccc]

How would default impact private pensions and insurance companies ? Because IIRC annuities are bought from Insurance companies - whop give you a return on your pension pot based mainly on returns on Government bonds/Gilts it has purchased. If a lot of their 'investments' disappear - will many of them simply go under ? And if so what happens to an individual's pension ? Just tough luck or some sort of bailout ?

[mightytharg]

How would default impact private pensions and insurance companies ? Because IIRC annuities are bought from Insurance companies - whop give you a return on your pension pot based mainly on returns on Government bonds/Gilts it has purchased. If a lot of their 'investments' disappear - will many of them simply go under ? And if so what happens to an individual's pension ? Just tough luck or some sort of bailout ?

The private pensions of the French, Germans, etc. should be paid by seizing the pensions and savings from the Greeks. The Greeks should obviously be left with nothing since they've spent more money than they have.

[Injin]

You can't spend credit. You can only spend money.

I never said any money had been spent.

The process of credit involves borrowing someone elses money to spend.

No, it doesn't. Credit extension involves handing goods over today in the hope of being paid tomorrow.

That the only reason people have been extending credit is because they have mistaken it for money lending is one more reason that all banking is fraud.

(right, time to pop out for a few hours before being sucked into a vortex centred on my computer screen )

Lovely day for it.

[ccc]

The private pensions of the French, Germans, etc. should be paid by seizing the pensions and savings from the Greeks. The Greeks should obviously be left with nothing since they've spent more money than they have.

Wars have been started for far far less....

[alexw]

The private pensions of the French, Germans, etc. should be paid by seizing the pensions and savings from the Greeks. The Greeks should obviously be left with nothing since they've spent more money than they have.

Fabulous, fantastic, why don't you just declare world war three and get it over with? Because that's what your ultimately proposing world war 3 - creditor states vs debtor states.

Got any more stupid suggestions?

[dissident junk]

I have a funny little suspicion about how this will play out. I think it will end in war between Greece and Turkey with Greece, ultimately, attempting to use the conflict as an expansionist economic tool.

Reasons ...

One) Turkey is pissing about over Cypriot drilling, trying to take advantage of EU upheaval to throw its ******** around in the region. War over this issue in the region is already being accepted as a possibility by both the Cypriots and the Lebanese, and is being reported as such on their news channels.

Two) The Cypriot issue is still a touch paper between Turkey and Greece. The Turks set it alight in the current climate, and the region could go up in flames a la Lebanon 80s stylee but on a far wider scale. The US and UK are over-extended, and it is debateable whether they could politically commit to another incendary conflict in the ME.

Three) Reason being ... it would not require much money for the Greeks to initally start guerilla style incursions outside of state sanction, or travel to support the ROC against Turkish attacks. Greek youth unemployment is rising and there are no jobs ahead. All the lads do military service. Greece also runs a civil defense programme. This means there is, essentially, a standing civil army in Greece with nothing else to do and no sense of a normal future.

Four) There are a lot of guns in Greece, and the potential to get a lot of guns through Balkan routes. Plus every young man knows how to shoot.

Five) Nationalism is growing in Greece. Push them hard enough, and you may start to get viciously xenophobic attitudes and a growing sense of grudges against former regional enemies or oppressors. Issues over asylum and immigration are already hot potatoes in Greece.

I can see a war coming. I hope I am wrong, but I can also see the EU free movement of labour principle being chucked in about two to three years in response to political outcry from Northern European states as the youth of Spain, Greece, Portugal etc move north to try and find work. This would then have the effect of trapping youths in dying countries with no opportunities; they won't just sit back and do nothing.

[mightytharg]

Fabulous, fantastic, why don't you just declare world war three and get it over with? Because that's what your ultimately proposing world war 3 - creditor states vs debtor states.

Got any more stupid suggestions?

You think the Germans (hampered by the French I admit) couldn't take the Greeks?!?

Surely the point about a nation's money is that is backed by the savings and property of the country's citizens. I don't see a problem.

The Greeks wouldn't have any reason to complain since even though they lose everything, they have already got more than this "everything" thanks to the generosity of the French and Germans.

[Traktion]

You think the Germans (hampered by the French I admit) couldn't take the Greeks?!?

Surely the point about a nation's money is that is backed by the savings and property of the country's citizens. I don't see a problem.

The Greeks wouldn't have any reason to complain since even though they lose everything, they have already got more than this "everything" thanks to the generosity of the French and Germans.

Anyone who bought Greek bonds knew there was a risk of default. It was never guaranteed. They speculated and they lost. They should get over it and have the good grace to realise that the market just chewed them up and spat them out.

[Deckard]

Anyone who bought Greek bonds knew there was a risk of default. It was never guaranteed. They speculated and they lost. They should get over it and have the good grace to realise that the market just chewed them up and spat them out.

Well said, that man. Now go and tell Sarko

[mightytharg]

Anyone who bought Greek bonds knew there was a risk of default. It was never guaranteed. They speculated and they lost. They should get over it and have the good grace to realise that the market just chewed them up and spat them out.

Yes, that's fine. All Greek-owned savings, pensions etc. should be seized to pay the French/German bond holders.Then the Greeks would be left with nothing, the French and Germans would get back a percentage of the value of their bonds.

That seems fair.

[CleverBear]

My anxiety is whether to view this thread or the the big fat greek thread!

From what I read about Greece up until a week or so ago the public sector had not been touched with any job losses, salary reductions, etc. I have also read that the likes of Doctors are still coining it in as, apparently, they have been charging cash in hand since WW2 and allegedly paying very little tax on it - surely all the above should be forced to cough up, no pun intended, before the poor in Estonia, Germany, the UK and elsewhere in the EU are forced to pay to bail them out.

We have all been moaning about it for years haven't we - our roads, railways, etc, being cr*p but when we go on our 2 week package holiday to France, Spain, Greece, Italy, we all come back moaning about how wonderful the roads, railways, clean streets, etc, are on the Continent. Truth is, those countries have been milking EU grants for 30 or 40 years and plenty of people have become super rich creaming off the tops of those EU grants.

We - us Brits - have always known it has gone on but have done nothing about it. The EU mandarins know that is goes on and, I guess, they have been laughing at the Brits, Germans and Northern Europeans for decades for being stupid enough to put up with it.

Now, if the Greeks, Spanish, Italians, etc, are not forced to get their act together they will simply carry on as before, go back to the land of taxless plenty leaving us stupid sods paying for them.

Rant over.

Edit:

They have plans to act 30,000 civil servants - don't hold your breath!

http://www.dailymail.co.uk/news/article-2044391/Greek-government-meet-cut-30k-civil-service-jobs-bid-save-6-9bn.html

Good post.

However public opinion has shifted (or become aware) against the southern european land of little work and high living standards.

You only have to look at the retirement age in greece (wasnt it 55?) and the remarkable pensions they recieve.

What on earth were germany thinking getting into a monetary union with such nations?

[CleverBear]

I have a funny little suspicion about how this will play out. I think it will end in war between Greece and Turkey with Greece, ultimately, attempting to use the conflict as an expansionist economic tool.

Reasons ...

One) Turkey is pissing about over Cypriot drilling, trying to take advantage of EU upheaval to throw its ******** around in the region. War over this issue in the region is already being accepted as a possibility by both the Cypriots and the Lebanese, and is being reported as such on their news channels.

Two) The Cypriot issue is still a touch paper between Turkey and Greece. The Turks set it alight in the current climate, and the region could go up in flames a la Lebanon 80s stylee but on a far wider scale. The US and UK are over-extended, and it is debateable whether they could politically commit to another incendary conflict in the ME.

Three) Reason being ... it would not require much money for the Greeks to initally start guerilla style incursions outside of state sanction, or travel to support the ROC against Turkish attacks. Greek youth unemployment is rising and there are no jobs ahead. All the lads do military service. Greece also runs a civil defense programme. This means there is, essentially, a standing civil army in Greece with nothing else to do and no sense of a normal future.

Four) There are a lot of guns in Greece, and the potential to get a lot of guns through Balkan routes. Plus every young man knows how to shoot.

Five) Nationalism is growing in Greece. Push them hard enough, and you may start to get viciously xenophobic attitudes and a growing sense of grudges against former regional enemies or oppressors. Issues over asylum and immigration are already hot potatoes in Greece.

I can see a war coming. I hope I am wrong, but I can also see the EU free movement of labour principle being chucked in about two to three years in response to political outcry from Northern European states as the youth of Spain, Greece, Portugal etc move north to try and find work. This would then have the effect of trapping youths in dying countries with no opportunities; they won't just sit back and do nothing.

War is coming to europe soon I agree. Hard to predict how and when yet though.

The blood of the war will be on the hands of eu nationalists who insist on driving together people who dont want to be driven together (as in rejecting french, dutch, irish NO votes in referendeums or not giving us referenduem UK). This cannot end well.

[Traktion]

Yes, that's fine. All Greek-owned savings, pensions etc. should be seized to pay the French/German bond holders.Then the Greeks would be left with nothing, the French and Germans would get back a percentage of the value of their bonds.

That seems fair.

What gives individuals in one country the right to seize the savings of individuals in another?

If the government defaults, it should default on both foreign and local investors in the same way. However, the government may choose to look after its own first and that is its prerogative - it has every right to pick and choose who to repay, just as any individual does.

Just because someone buys some bonds in another country, it doesn't give them the right to pillage those living there when the government collapses.

[Traktion]

Good post.

However public opinion has shifted (or become aware) against the southern european land of little work and high living standards.

You only have to look at the retirement age in greece (wasnt it 55?) and the remarkable pensions they recieve.

What on earth were germany thinking getting into a monetary union with such nations?

If it was so obviously unsustainable, why did people lend them money? More fool them, tbh.

[CleverBear]

If it was so obviously unsustainable, why did people lend them money? More fool them, tbh.

True. Although greece did lie about their finances....constantly...for years

[Injin]

True. Although greece did lie about their finances....constantly...for years

Behave.

If we know it on here then it was obvious to anyone with any bloody sense a long time ago.

They've gotten into the government debt because of the ability to steal it provides. On that basis alone I'd say ****** 'em.

[fluffy666]

True. Although greece did lie about their finances....constantly...for years

If you were lending me a billion quid, would you want to pry very very deeply into my accounts first, or would you just take my word for it?