Greece Nears a Tipping Point in Its Debt Crisis

[alp227]

Source: The New York Times

FRANKFURT — Europe appeared to be lurching toward a moment of decision in its sovereign debt crisis Sunday, as Greece struggled to meet conditions for additional aid amid rising German impatience with the cost.

Prime Minister George A. Papandreou of Greece canceled a planned trip to Washington to meet with his cabinet Sunday, in what looked like an increasingly desperate attempt to show foreign benefactors that the government can keep the promises it made in return for aid. Without the aid, the country would certainly default on its debt, an event that economists have warned could lead to bank failures in other countries and ignite another financial crisis.

“Greece’s imminent default is assured,” Carl B. Weinberg, chief economist at High Frequency Economics in Valhalla, New York, wrote in an e-mail Sunday. “Without an injection of cash within the next weeks, the nation will run out of resources to service its debt.”

Other analysts are less pessimistic, arguing that European leaders will do what is necessary to save Greece once they are confronted with the ugly ramifications of a default. These might include having to rescue banks, particularly in France and Germany, that have large holdings of Greek bonds, as well as putting even more acute pressure on other highly indebted euro zone countries like Italy and Spain. In the worst case, the euro could come apart, setting back the cause of European unity by decades.

Read more: http://www.nytimes.com/2011/09/19/business/global/19iht-euro19.html?pagewanted=all

[Turbineguy]

1. I think he means that

High Frequency Economics in Valhalla stands to lose a lot of money if the Greeks don't default.

[MidwestTransplant]

8. A lot of people do considering the credit markets are pricing in a mid 90% chance they will.

[bossy22]

10. Credit Default Swaps on greek debt are over 5000 basis points

[Turbineguy]

32. Those swaps factor in a probability

over the next five years.

[azurnoir]

2. well it seems that Greece has a new friend

in the Mediterranean region that boasts of escaping the global economic crisis couldn't they help more?

[dipsydoodle]

3. In the absense of a recognisable tax collection system

they should be left to fold. No point in pouring in any more funds.

[Ikonoklast]

14. People ignore that this is the basic problem:

Germany collects taxes on its businesses and citizens so Greeks can continue to refuse to pay theirs?

Greece has been skating on the thin ice of borrowed money for many a year, and they still refuse to take any responsibility.

[closeupready]

34. That point is spot-on.

No getting around it.

[midnight armadillo]

24. Greek Wealth Is Everywhere but Tax Forms

http://www.nytimes.com/2010/05/02/world/europe/02evasion.html
Greek Wealth Is Everywhere but Tax Forms
Various studies, including one by the Federation of Greek Industries last year, have estimated that the government may be losing as much as $30 billion a year to tax evasion — a figure that would have gone a long way to solving its debt problems.

http://www.npr.org/templates/story/story.php?storyId=125125500
Greece's Bottom Line: Too Many Tax Cheats
On top of controversial plans for deep cuts in public sector wages and tax increases, the Greek government — which took power in October 2009 — says a central pillar of economic recovery is getting Greeks to pay all their taxes.

http://www.cnbc.com/id/43223303/Greece_Tax_Cuts_or_Crackdown_on_Tax_Cheats
Greece: Tax Cuts or Crackdown on Tax Cheats?
As the race for a new bailout for Greece continues, one of the main bones of contention between opposition politicians and the Greek government is tax. The government wants to keep the recently raised tax rate, and further increase tax revenues by cracking down on tax evasion, which costs the Greek economy up to 15 billion euros ($21.6 billion) annually.

[Demeter]

4. They Want to Maintain the Status Quo--Reality Forbids This

How can a government keep all the banksters fat and happy, and all the cronies out of jail, and meet its obligations?

It can't be done. The goals are mutually exclusive. And while the Obscenely Wealthy are fighting amongst themselves, the natives are getting pissed off and hungry. Those people who actually create the wealth and make the nation are the only ones who have to be satisfied and made whole. The rest can go on a diet, and take their well-deserved punishment.

[bossy22]

5. either a eurobond is created or greece defaults

[jwirr]

6. Do any of the rest of you think we have seen this headline before?

[Fire Walk With Me]

7. Greece should do like Iceland and tell the IMF to FUCK OFF.

[bossy22]

9. and do what?

a hard default? Atleast Greece is being mature and realizes that its problems are also international problems. A hard default (or any default) could bring the eurozone economy to its knees and force the U.S. into another recession. While I don't agree with the demands of the IMF are making (since cutting govt spending and growing the economy in this case are mutually exclusive) I do not fault Greece for trying to do everything to avoid a default.

[Fire Walk With Me]

12. Worldbank and the IMF are slavers.

The change required to eliminate them is significant but necessary.

[bossy22]

17. that still doesnt change the scenario

Greece still can't service its debt.

[Fire Walk With Me]

21. So long as you buy into their terms, you are their slave.

[bossy22]

23. Well if you want to live in your own fantasy world you can call yourself what you want

I dont know about you, but i distinctly remember what happened during the last credit crisis. are you also one of those "sovereign citizens"?

[Fire Walk With Me]

25. No, I'm just someone sensing a change with an interest in the new direction ;)

[Katashi_itto]

19. 3RD Option. U.S. steps in and does a Bailout of Greece, to prevent a

Banks from collapsing. Destroying the dollar in the process.

[bossy22]

22. a bailout of greece would not destroy the dollar

bailing out greece would cost less than half of what we spent on the stimulus package. Look at it this way, Greece's economy is about the same size as the city of LA's

[tama]

27. You suppose

that Miraculous Growth(TM) will happen and postpone the debt crisis - that has been really building up since 1979 - until next time? Sorry, not going to happen.

Eurozone and the rest of the debt-driven finance system are going to collapse anyway, only question is how and when. Day by day we are getting more and more sick of the elites who can only say "more more growth" and not do or think anything real.

In Argentina and elsewhere in Latin America they got rid of IMF and neoliberal policies, because without exception, they lead to collapse of the system they feed on with much suffering. EU-elites with their neoliberal Lissabon Treaty that was most undemocratically forced upon EU-citizens by spineless and corrupt national politicians are in the same neoliberal ideology camp with IMF and the rest of robbing banksters. We don't need them, they need us to feed from and can keep up their parasitic life-style only by keeping us in slavery.

[Jackpine Radical]

11. Amen to that thought.

Default and starve the beast. Let the bankers crash, and nationalize (internationalize?) the banks.

[bossy22]

18. AND LOSE YOUR JOB!!!!!!

because thats what will probably happen. In the scenario above the credit markets would completely freeze cutting off everything from billion dollar loans to fortune 500 companies to personal credit cards. You think 9% unemployment is bad, try 29%.

[tama]

28. Yes

lose unproductive jobs that are harmfull to the environment, stressfull and not good for human well being. Of course there is also lot of good work to do. The system does not reward good work because it's nothing but a global ponzi scheme, there for we need another world. It is possible and what is possible will happen, as Aristotle said.

[NickB79]

40. Know what's more stressful than a crappy, unproductive job? Not having food

Being evicted from your house because you've run out of money now that you've burned through your savings and unemployment. Sleeping in the back of your car. Living out of a cardboard box, wearing rags and rotting shoes in the middle of winter.

I'd say that would also be "not good for human well being."

[tama]

41. Is that your situation?

Or are you just afraid it could be? Any case, investing in "social capital" aka good friends is very important, much more important than crappy unproductive jobs (that pay so little you still can't afford food...).

I have a friend who does not have a job, does not take any money from the governement, does not have anything to do with the official state (except there's a warrant on him), does not have a home nor a car. He stays with friends, Rainbow camps, etc., dumbster dives and gets few coins from selling recordings of his music. I have an other friend who is self sufficient gatherer/gardener and works four hours per day to satisfy his material needs, uses no money at all. He's actually quite well known public figure with many friends.

I'm not saying others should or could live like them, just that I know it's possible. And that we are all in the same boat, space-ship Earth, and we need to start acting like we are in the same boat ASAP, as individuals and communities. Greed and selfishness don't help us in this situation anymore than self-pity and whining. Making friends does, my friend.

[GliderGuider]

38. As far as I can tell, massive job losses are now baked in the cake...

...no matter what the pols and banksters try. We are already in the soup, and nobody knows what's going to happen from here on in, or how to control the unfolding events. Everyone is trying to keep their end of the ship from sinking, but the hard reality is that the entire global economy is headed for a wall.

[tama]

42. So

letting go of attempts to control the future might be also a good idea, if and when we have no idea how to control the unfolding events? Just go with the flow?

[GliderGuider]

44. I have a friend who speaks my thoughts on this subject

Here is a link to a blog post of his that captures the words of both my mind and my heart. The excerpt doesn't really do it justice. I think you'd like the whole thing.

The Quest for Vision

For the longest time, I found it really difficult to imagine, create, or buy into a vision for the future. People would hand me thick folders full of their ideas and plans. Others would send me links and attachments. Some, often after screenings of our documentary, would tell me face to face what it was they were excited about. And many other visions and plans came across my radar just by virtue of my being connected into the Doomosphere™. But by and large, whether it was the relocalization movement, the biochar revolution, or the audacity of hope, whether any of these might be good ideas or not, I just couldn’t manage to really feel the excitement that so many around me appeared to be feeling.

Here’s what came to us that day: it makes sense (and it resonates with us) to view our collective situation – our present predicament, our long emergency, our powerdown, our doomsday, our danger/opportunity, our end of suburbia, our life after the oil crash, our nuclear holocaust, our great turning, our die-off, our financial Armageddon, our eleventh hour, our petrocollapse, our overshoot, our endgame, our final crash, our mass extinction underway, our six degrees, our final empire, our ascent of humanity, our revenge of Gaia, our end of the world as we know it – as an initiation into cultural maturity at a grand and terrible scale, as some sort of a vision quest for the collective heart, mind, and soul. If that is so, it may help us to remember that the initiate does not go into the vision quest with a vision already in mind. That’s what makes it a quest. Initiates go first into the sweat house or death lodge, or embark on some similar process, or simply find themselves in a “dark night of the soul.” During this time the elders urge them to shed what needs to be shed, to symbolically “die.” Only then are they released into the wilderness to prove themselves ready and worthy, to be given a vision by the gods. And only then, upon their return, having faced their trials successfully, can they be reborn as fully adult members of the tribe, vision in hand to offer as service to the greater good of their community, and to give them meaning for their lives.

We were working to get quiet and still, to sit for long days and nights, fasting from the ideas, assumptions, and energies of the dominant culture, and to learn, in the poet David Whyte’s words, to be in conversation with the Universe, rather than in control. The old visions? The visions given us by the culture in which we were raised? The visions of control and domination, of fixing and solving and making things happen, of even “benignly” ruling the world? Those we were shredding as quickly as we could. As I said in What a Way to Go, this culture’s arrogance, its adolescent sense of invincibility and entitlement, must be sloughed off to make room for a more mature sense of interdependence with, and responsibility to, the community of life. This is the work of initiation. This was the work we were doing, and still do to this day.

There is little to figure out here. Little to reason through. Little to analyze, plan, and make happen. There is mostly the heart pounding with love, the blood rushing with excitement, the mind touched with snippets of poetry and image, the rough scratching of fingers in soil and the tickling of toes in the grass or the scuff of heel on concrete. It feels as though the whole of our reality, and of our collective predicament, surpasses our minds and egos. The vision can’t be known right now, it seems. But it can be felt. It can be sensed and intuited. It can be aligned to and resonated with. We are the children of this planet, after all, as surely as the deer and the dragonfly. We can belong here, if we choose. Like the birds and beasts, we can hear the tsunamis coming and make our way to whatever higher ground there is. We can sense the hunters coming and protect our cubs. We can find shelter in the storm, and joy in the dance.

[tama]

26. +1

[GliderGuider]

37. +2

[Katashi_itto]

13. Tick...tick...tick...

[unkachuck]

15. "Greece Nears a Tipping Point in Its Debt Crisis"

....so tip, already....default, go back to your own currency and economy and forget the EU....

....better yet, why don't they just give German taxpayer euros directly to the global banksters and cut-out the middle-man?....poor old Greece can't afford to pay bankster protection money any longer, leave them alone....

[tropicanarose]

16. I am so sick of the fear mongering......every day we hear about this teeter totter and it keeps us r

in a constant state of anxiety and fear. It isn't good for any of us. I wish that they would just get this resolved. They aren't going to let Greece go under.
This is just psychological/political warfare.

[tama]

31. Emotions like fear are catchy

like flue. The elites - finance, politics and media - are truly fearfull because they know they are parasites on top of pyramid hierarchy of ponzi scheme.

We the people have nothing to fear if and when the ponzi scheme of parasite elites collapses, only thing we will loose is our schackles and everything to gain. Another world is not only possible, it is also unavoidable. Have no fear my friend! :)

[DallasNE]

20. Government Is The Problem In This Case

They demand austerity measures for Greece that reduces GDP and thus the ability to pay off the problem loans. The governments need to wake up and actually come up with a plan to expand the economy of Greece and thus their ability to service the debt. Problem solved. The best thing that could happen for Greece is for the Merkel government in Germany to fall. And if the polls are right that may happen sooner than people realize.

[JCMach1]

29. As Greece is so reliant on tourism, the only thing that fixes that is if the world economy recovers

which is not likely any time soon.

[AndyTiedye]

35. And Riots in the Streets Tend To Make Tourists Stay Away in Droves

[Psephos]

36. They seem not to be recognizing this in Egypt, also. n/t

[DallasNE]

43. Sometimes You Have To Take A Step Back

Before you can move forward. Would Egypt be better off with the Murbarak family still in charge. I don't think so.

[Psephos]

46. My point was about riots and street violence, not Mubarak.

Mubarak has nothing to do with it. But good riddance anyway.

Your point is essentially, too bad about that collateral damage. I hear the same bullshit from military commanders.

Attacking and assaulting CBS reporter Lara Logan did not help the Eqyptian tourist economy. Didn't do much for the moral argument either.

When you decimate the number one source of foreign exchange in Egypt, you guarantee more violence and barbarism. As usual, it will be the nameless, faceless people who suffer. Actions have consequences, and those who act to increase grief and misery are the asshole of humankind.

February:
"During the protests, the Committee to Protect Journalists registered 53 assaults on journalists. It did not delineate the genders of the people affected. There were also dozens of cases of harassment during the weeks of protests, and some female journalists complained about being singled out by crowds. There were no other known sexual assaults."

http://mediadecoder.blogs.nytimes.com/2011/02/15/cbs-lara-logan-suffered-brutal-attack-in-cairo/

September:
http://articles.cnn.com/2011-09-10/world/egypt.journalists.targeted_1_israeli-embassy-angry-crowd-embassy-attack?_s=PM:WORLD

[AngryAmish]

39. How would you expand the economy of Greece?

The natural resources are scarce. The level of trust within society is low. The firms tend to be small. The population is aging rapidly. It is a nation of tax cheats.

I don't have a dog in this fight (other than the survivsal of the euro is probably, on balance, a good thing) but Greece is and shall remain a basket case.

[JCMach1]

30. When Dubai came close to default, the world didn't scream too loudly when they re-structured the

debt... ON THEIR OWN TERMS.

This shouldn't be about a Euro power-play and IMF obeyance...

[DCKit]

33. I would have thought French and German bankers would know better than...

to buy Greece's debt.

A person could almost be excused for thinking they were looking forward to the fire sale and privatization of Greece's public/government assets.

[Imajika]

45. Greece is entirely screwed...

They are so far in the hole that even if they default and don't have to pay their creditors, they still wouldn't be able to meet their obligations to their public workers, pensioners, etc. Their economy is an absolute shambles.

I do think they should just get it over with, default, leave the Eurozone and bring back their own currency. However, it is going to be extremely ugly as without the bailout funds they will have to cut even deeper than they are now. Default, in the short term, will mean more public workers fired, more pension and safety net cuts, etc. Still, it's really the only way for them to get out of this misery. They can blackmail Germany and France into giving them more money for awhile, but eventually Europeans are just going to get tired of it and in the meantime Greece is just slowly spiraling into the crapper. Just get it over with.

[DallasNE]

47. And Just How Did They Get In This "Screwed" Position

In the first place.

Frankly, my knowledge of how they got where they are is incomplete and my even come from biased sources but it seems that two major factors are in play here. Greece was a key ally in the Cold War so large American aid poured into Greece with no strings attached. That was a breeding ground for corruption, so corruption flourished -- and still does. The end of the Cold War meant that far fewer greenbacks were coming their way and they failed change their corrupt ways. This set them reeling but they may have survived except for one thing. Far too many of those toxic bundled loans that brought down Lehman Brothers did not end at American shores and ended up in Greece. When rating agencies give a triple A rating to junk bonds a lot of people will get hurt.

I don't know what the solution is so you may be right. Should "too big to fail" apply to Greece. If so, who underwrites it? Is it a Eurozone problem or is there American responsibility as well since it was our toxic assets, falsely labeled, that were the straw that broke the camels back. I guess what I am saying is that the problem is far more complex than your post suggests.