Why Aren't Markets Panicking About Greece?

[winkie]

The main risk i see is if the greeks get any sort of reduction on their debt the rest of the PIIGS are going to say we want a bit of that, then it will become very expensive for someone

Now who would that be I wonder?

Can't they just buy it up as bad debt... kick it into the grass 50 years or so.....bit of extra time to forget about it?

[Venger]

SYRIZA has said they want to remain in the EURO, despite renegade members saying otherwise.

My guess is we'll have another few years of 'hard negotiation' in politician speak (ie, inaction) of avoiding doing anything...so both the greeks and germans can pretend they got the best deal for both countries. A little more debt will be written off...not enough...greece will continue to circle the plughole.

Maybe im wrong, maybe a new/non-establishment party has the balls to do something...but I doubt it. I've never seen a sincere socialist and I doubt I will do now.

That, a bit of give, and public sector reforms and sell-offs, slowly having effects, boosting productivity and inward investment and job creation. Leading more of the young to embrace and stick with reforms, for it's in their own wider interests... over the next decade / 20 years.

Honestly though; to read the very people who have been so anti-bust/anti-hardships - now posting up how the bust is breaking up corrupt positions, really does my head in. They can only see it now? Want to take claim they had foresight of the advantages (austerity and allowing the bust and forcing reforms) would bring now?

Back in the UK it's still 'forever HPI' from them, and 'why would you force unnecessary hardship on people' (err because it breaks up malinvestment / inefficiency / over-extended VI positions, corruption, oligarch positions, and should lead to much lower house prices even if it's against lower incomes, and allows, in the longer run, opportunity for many more younger people and future generations - and those younger people already carrying all the unnecessarily hardship themselves as the VI offer them HTB and SO and BTL corner rental markets because of no correction and policies - and lot of extra debt - to maintain malstructured positions.)

[no lucky man]

ECB QE = 1 Trillion Euros

Greek problems = peanuts

[R K]

Syriza are pro-European and pro-Euro. They do not want a grexit. Quite the opposite. It is Schauble/Wiedmann, Finland, german media etc who are the threat to the EZ, not Syriza.

They are exactly what Europe and EZ needs. Democracy!

In any event most of greek debt is held by instiutions and so write-offs, write-downs, maturity extensions and so on have little impact on the EZ private sector in reality.

It is puzzling why young, pro-democracy, anti-oligarch, anti-bailout, anti-corporate tax evasion posters on hpc arent strongly PRO Syriza and democracy. Presumably it is because they believe all this "austerity" nonsense fed to them by the creditors banks and elites via the right wing media & UK govt?

Edited January 26, 2015 by R K

[Venger]

My hopes are they are pro-European and pro-Euro - although clearly they are going to show all their cards with negotiations to be had, and of course going to have some concerns with some of their political leanings. Winkie summarised it best, that they are such political groups may be unfairly labelled by those they threaten (domestically and in the EU).

Looking at the best case and they will negotiated sensible with EU for some give-and-take from this point, being realistic about their position and continuing slow reforms. It seems to me they never would have come to power without policies of austerity imposed on them by reality and by refusal of others to lump up vast sums to keep them in the good times. And it has forced some interesting state-side reforms, and privatisations we've been seeing last few years.

Greece shows what can happen when the young revolt against corrupt elites

The rise of Syriza can’t just be explained by the crisis in the eurozone: a youthful generation of professionals has had enough of tax-evading oligarchs

Paul Mason article

The benefits from austerity - which is hardly extreme poverty either for the majority - are a long term process, breaks up oligarch positions, reforms malstructured tax evasion and greed positions of the boom years, as it also opens up opportunity.

They have to continue with reform, and some having less than they had in the boom, and having to work harder and more smartly... but if the future becomes brighter, over the next decade of two for younger generations, it will be direct result of austerity (which still has further to run). What would have been the alternative; no reforms, systems riddled with nepotism over ability, awarding the chosen ones with lavish pension benefits, malstructured property distribution, loads free bailout money to maintain the old ways, same old VI continuation, spending more than you take in, continuing to take on big liabilities and add it to the debt pile?

[Gigantic Purple Slug]

Probably be

Syriza are pro-European and pro-Euro. They do not want a grexit. Quite the opposite. It is Schauble/Wiedmann, Finland, german media etc who are the threat to the EZ, not Syriza.

They are exactly what Europe and EZ needs. Democracy!

In any event most of greek debt is held by instiutions and so write-offs, write-downs, maturity extensions and so on have little impact on the EZ private sector in reality.

It is puzzling why young, pro-democracy, anti-oligarch, anti-bailout, anti-corporate tax evasion posters on hpc arent strongly PRO Syriza and democracy. Presumably it is because they believe all this "austerity" nonsense fed to them by the creditors banks and elites via the right wing media & UK govt?

Probably because most people on here are cynical enough of politicians to know that a group getting elected on the basis of a number of conflicting promises is unlikely to stick to all of them.

If you are going to play the democracy card then it's worth remembering democracy is a two way process. Greeks may be entitled to their democracy, but there are a hundred million germans, finns, austrians and many others who are entitled to their democracy as well.

[long time lurking]

ECB QE = 1 Trillion Euros

Greek problems = peanuts

Portugal = more peanuts

Spain = even more peanuts

Italy = even more peanuts again and so on

They are all going to want a piece of the action if there is any action

suddenly 1 trillion don't look a lot

Uk did £375 bn compared to £875 bn the ECB has just announced for 28 countries? and it saved the banks and since the national debt has doubled ,,,what was Greece's problem again

[wonderpup]

I just watched an interview with the new finance minister in Greece- he summed up the absurdity of the current Troika position in a single sentence- he said they are 'lending money to the Greek state on the condition that it should diminish it's ability to pay that money back'

I like Varoufakis- it will interesting to see what kind of impact a non conventional economist might have on the neo liberal legions of the EU establishment- he might at least present them with a point of view that did not originate in Chicago circa 1975.

[crashmonitor]

Portugal = more peanuts

Spain = even more peanuts

Italy = even more peanuts again and so on

They are all going to want a piece of the action if there is any action

suddenly 1 trillion don't look a lot

Uk did £375 bn compared to £875 bn the ECB has just announced for 28 countries? and it saved the banks and since the national debt has doubled ,,,what was Greece's problem again

Possibly the real bailout was for the Uk welfare system. As you say National debt has doubled to pay for the NHS and pensions because QE allowed the Government to borrow for nothing. But hey let's keep the cover story of banker bashing because DLA, minimum income guarantee, housing benefit and unlimited NHS care isn't much to expect ''after a lifetime of working''.

Edited January 26, 2015 by crashmonitor

[long time lurking]

Possibly the real bailout was for the Uk welfare system. As you say National debt has doubled to pay for the NHS and pensions because QE allowed the Government to borrow for nothing. But hey let's keep the covert story of banker bashing because DLA, housing benefit and unlimited NHS care isn't much to expect after a lifetime of idleness.

Ill scratch your back if you scratch mine they had to have someone to cream of a percentage of their funny money funding ..it would look to much like they were just printing money for the sake of it would .RBS/Lloyds still be solvent/around without QE ?

But yes most countries are living beyond their means

Edited January 26, 2015 by long time lurking

[Venger]

I just watched an interview with the new finance minister in Greece- he summed up the absurdity of the current Troika position in a single sentence- he said they are 'lending money to the Greek state on the condition that it should diminish it's ability to pay that money back'

I like Varoufakis- it will interesting to see what kind of impact a non conventional economist might have on the neo liberal legions of the EU establishment- he might at least present them with a point of view that did not originate in Chicago circa 1975.

That's twisting the truth of it a bit; they're continuing to lend to soothe the process of structural reforms, privatisations, keeping their banks open and savers to have € savings intact, and long term rebalancing. Until a time comes all these measures begin to pay off, and bring about more opportunity and growth.

Would they prefer to be cut off from borrowing and to be smashed back into a lot of poverty? With very few creditors willing to do business with you after having taken a deliberate decision to default on debts. Where you rely a lot on imports still; rather than taking debt on offer to help position your economy to improving exports and inward investment and jobs. Or perhaps they should go back to awarding chosen ones in society to have best jobs, allow you to pay tax if you want to, lavish retirement benefits, hope the Oligarchs throw them a bone.

[long time lurking]

I just watched an interview with the new finance minister in Greece- he summed up the absurdity of the current Troika position in a single sentence- he said they are 'lending money to the Greek state on the condition that it should diminish it's ability to pay that money back'

I like Varoufakis- it will interesting to see what kind of impact a non conventional economist might have on the neo liberal legions of the EU establishment- he might at least present them with a point of view that did not originate in Chicago circa 1975.

A fisherman owes you a £1mil and they have a boat you may get the money back if you take his boat you get a boat

[long time lurking]

That's twisting the truth of it a bit; they're continuing to lend to soothe the process of structural reforms, privatisations, keeping their banks open and savers to have € savings intact, and long term rebalancing. Until a time comes all these measures begin to pay off, and bring about more opportunity and growth.

Would they prefer to be cut off from borrowing and to be smashed back into a lot of poverty? With very few creditors willing to do business with you after having taken a deliberate decision to default on debts. Where you rely a lot on imports still; rather than taking debt on offer to help position your economy to improving exports and inward investment and jobs. Or perhaps they should go back to awarding chosen ones in society to have best jobs, allow you to pay tax if you want to, lavish retirement benefits, hope the Oligarchs throw them a bone.

What industries have they got that are going to grow to the extent, the debt would become manageable the euro finished tourism have/did they have much else ?

[Venger]

What industries have they got that are going to grow to the extent, the debt would become manageable the euro finished tourism have/did they have much else ?

How should I know. The finest Conservatives have pondered that question, decade-over-decade, through hard recessions, where the Gov-Should-Create-Jobs protesters point fingers claiming it should all be magicked better by Gov/more Gov spending etc..

All Gov can do is create conditions (fair taxes, balancing playing field, anti-corruption, rule of law etc) for private enterprise to grow, flourish and meet demand in the world market.

S&P affirms Greece's credit rating, citing rebalancing economy

ATHENS Fri Mar 21, 2014

S&P said the stable outlook balances its view of the government's commitment to fiscal and structural adjustments against the economic and political challenges of doing so.

"The government has made significant reforms to the labour market and fiscal revenue collection and plans further reforms in commerce," it said.

After six months of wrangling with the EU and IMF in the longest review of its bailout so far, Athens won praise from its lenders this week to unlock the next tranche of loans.

Athens says last year's surplus came in at 2.7 billion euros (£2.25 billion), compared with a bailout target for a balanced budget. That has boosted its hopes of returning to the bond market in the first half of the year after a four-year absence with a 2 billion euro five-year bond.

S&P, which has maintained its rating since upgrading Greece from "selective default" in December 2012, said it could raise its long-term rating on Greece if GDP growth were to pick up "substantially".

Athens and its lenders expect the economy to pull out of recession this year and grow marginally by 0.6 percent.

[shindigger]

A fisherman owes you a £1mil and they have a boat you may get the money back if you take his boat you get a boat

How much is the fish?

Does the fish have chips?

[interestrateripoff]

What industries have they got that are going to grow to the extent, the debt would become manageable the euro finished tourism have/did they have much else ?

http://en.wikipedia.org/wiki/Economy_of_Greece

A developed country, the economy of Greece mainly revolves around the service sector (80.6%) and industry (16%), while agriculture made up an estimated 3.4% of the national economic output in 2012.^[2] Important Greek industries include tourism and shipping. The Greek Merchant Navy is the largest in the world, with Greek-owned vessels accounting for 15.17% of global deadweight tonnage as of 1 January 2013,^[32] for the unprecedented demand of investment on the shipping industry of international transportation between Greece and Asia in recent years

The service sector I presume mostly tourism accounts for most of the service sector? Shipping seems dependent on global trade which seems volatile at the minute.

It would appear the Greeks need to develop an industrial base from scratch and rebalance, they need to take a leaf out of George's book he's done a wonderful job of rebalancing the UK economy.

[long time lurking]

http://en.wikipedia.org/wiki/Economy_of_Greece

The service sector I presume mostly tourism accounts for most of the service sector? Shipping seems dependent on global trade which seems volatile at the minute.

It would appear the Greeks need to develop an industrial base from scratch and rebalance, they need to take a leaf out of George's book he's done a wonderful job of rebalancing the UK economy.

Well thats just what I thought Greece is tourism which has been damaged badly since they adopted the euro ,tourism will not bounce back if they keep the euro and the same could be said for Spain's tourism

[long time lurking]

How much is the fish?

Does the fish have chips?

Did it go platinum ^^^^^^^^^^

[billybong]

Greece has a population of about 11 million so it's not going to compete industrially with anyone, well hardly anyone - even if it invested heavily in advanced technology/robotics etc etc.

If it's to stay in the ez then realistically it's going to be a bailout country virtually in perpetuity. The centre (and Greece) has to decide whether Greece is strategically worth the long term bailouts.

Plenty of people in the UK, for instance, would prefer the lifestyle of the pre eu Greece to the congested industrial/financial ponzi model - if Greece had political stability.

There's nothing special in terms of quality of life for the majority in the UK's model - far from it - even if a tiny minority benefit from it financially.

[Venger]

http://en.wikipedia.org/wiki/Economy_of_Greece

The service sector I presume mostly tourism accounts for most of the service sector? Shipping seems dependent on global trade which seems volatile at the minute.

It would appear the Greeks need to develop an industrial base from scratch and rebalance, they need to take a leaf out of George's book he's done a wonderful job of rebalancing the UK economy.

It's for private enterprise to target where profitable commercial opportunities exist, find financial backing, and to go for it. I wouldn't have thought you want to compete in saturated markets full of overcapacity; unless you develop new niche expertise and products (Let's see how Germany holds up with exports of its Audis etc to Canada and China)- but other capitalists may see it differently, or innovate a component for the line, or win some business for partial assembly.

Maybe some Greek entrepreneurs could borrow to set up higher end (but cost-attractive by other country's cost-positions) and high standards of healthcare facilities alongside, to service demand from Europe's ageing population. Last time I was in Crete, or was it the trip to Corfu, many years ago, lots of elderly couples there for 6 months over the Winter - not a big jump to a more stable Greek economy having confidence to permanently retire. The options in free markets are pretty much limitless, in my experience. Depressions are a time to compete, where lower costs can put you at a trading advantage..

Germany 'exporting' old and sick to foreign care homes

Pensioners are being sent to care homes in eastern Europe and Asia in an austerity move dismissed as 'inhumane deportation'

26 December 2012 16.37 GMT

..But with increasing numbers of Germans unable to afford the growing costs of retirement homes, and an ageing and shrinking population, the number expected to be sent abroad in the next few years is only likely to rise. Experts describe it as a "time bomb".

Seems to me, so much of the blaming for is by the anti-capitalist who expect Gov to look after everyone to the highest stanrds, provide all the jobs, run the economy on rivers of red ink, and the doers in society to carry everyone else. Preferring the old ways with oligarchs, VIs, have rigid restricted labour rules/laws (still more needing doing there), spend and HPI forever boom.

Greek start-ups rise from the ruins

An unclassical revival is taking place in Athens, where start-ups are booming

29 Jun 2014

...But despite these socio-economic headwinds, a nascent Greek start-up ecosystem is rising out of the ashes of the Greek economy.

The swollen public sector, which once employed 1.2m, has been forced to shed 250,000 people in three years. The private sector has been unable to soak up the jobless. Many have left the country, but those left behind are coming up with innovative schemes to support themselves.

According to the not-for-profit organisation Endeavor Greece, 144 new companies were created there last year - up from 16 in 2010.

...Nikos Anagnostou is the man behind GreekStartups.com – the Greek equivalent of CrunchBase or AngelList.

“E-commerce, travel, cloud technologies, mobile, social, software as a service and internet of things are all popular,” he says. “And the birth rate of technology start-ups is now massively exceeding the death rate of old companies.”

http://www.telegraph.co.uk/finance/globalbusiness/10931354/Greek-start-ups-rise-from-the-ruins.html

The hope for the future lies in incubating new products and services, in other words, in entrepreneurship. To do that, flexibility and adaptability must be the hallmarks of the economy and government policy. Legions of small businesses should be encouraged to form. Many ideas need to be tested in the market place in order to come up with the 20 to 30 major innovations that will create vigorous economic growth.

[silver surfer]

Greece has a population of about 11 million so it's not going to compete industrially with anyone

Sweden has a population of about 10 million, Switzerland about 8 million and Finland about 5 million. They all manage to "compete industrially".

[billybong]

Sweden has a population of about 10 million, Switzerland about 8 million and Finland about 5 million. They all manage to "compete industrially".

Indeed and how long did it take for them to establish their position - and they established themselves well before the Chinese et al etc etc came on the scene. For the Swiss likely going back beyond their cuckoo clock days. Their own position isn't all that secure in terms of industry either.

If the Greeks were going to compete industrially or going to want to compete industrially they would have done so by now.

Edited January 26, 2015 by billybong

[silver surfer]

Indeed and how long did it take for them to establish their position - and they established themselves well before the Chinese et al etc etc came on the scene. For the Swiss likely going back beyond their cuckoo clock days. Their own position isn't all that secure in terms of industry either.

If the Greeks were going to compete industrially or going to want to compete industrially they would have done so by now.

I don't necessarily disagree with any of that, but your original point was that Greece's industrial potential was limited because of its small population.

[Gigantic Purple Slug]

Indeed and how long did it take for them to establish their position - and they established themselves well before the Chinese et al etc etc came on the scene. For the Swiss likely going back beyond their cuckoo clock days. Their own position isn't all that secure in terms of industry either.

If the Greeks were going to compete industrially or going to want to compete industrially they would have done so by now.

lol.

Next time try "I was wrong" for increased credibility.

[billybong]

lol.

Next time try "I was wrong" for increased credibility.

No because it's true.

Greece in 2015 in the globalised world with 11 million in population is unlikely to be able to ever compete industrially to the extent required to avoid continual bail outs - but if you want to expand on your rather feeble response to claim otherwise then do so.

Your response is no standard of credibility.

Edited January 26, 2015 by billybong