Investors Ask if Anything Can Save Greece From Default

[alp227]

Source: The New York Times

After months of wrangling, Greece’s frustrated lenders are on the verge of disbursing funds to keep the near-bankrupt nation solvent.

But as investors and increasingly frantic policy makers confront mounting fears of a run on European banks, the need to bail out Italy and a second global recession, the €8 billion tranche Greece expects to receive from its creditors could well be too little, too late.

Under intense pressure from the United States, euro zone leaders spent the weekend in Washington working to craft a rescue plan to bolster sickly banks and buy the bonds of weak countries like Italy. But past efforts to bring an end to the debt crisis in Europe — including a second, €109 billion rescue plan for Greece forged by Europe and the International Monetary Fund in July — have failed to stand up. Investors remain skeptical that another plan will be any different.

On Saturday, the finance minister of Greece, Evangelos Venizelos, said that Athens had received a “clear message of support” from U.S. and European officials at the annual meetings of the monetary fund and World Bank, held this weekend in Washington.

Read more: http://www.nytimes.com/2011/09/26/business/global/investors-ask-if-anything-can-save-greece-from-default.html

[DJ13]

1. No, next question?

The path has been shown by Iceland.

Sorry investors, sometimes you lose.

[dipsydoodle]

3. Agreed

There is a difference however. Iceland has got a recognisable tax collection system - the Greek system for collection of income tax is noticable by its absense.

Thats one of the reasons they increased vat to 23% in July.

[Selatius]

5. Their taxing system is lax at best, and people abuse it regularly.

If Greece wanted quick money, they'd go after their top income earners and make them pay. That, and I suggest they liquidate banks in their jurisdiction that peddled fraudulent securities and seek the extradition of foreign bankers who may have had a hand in it.

[jwirr]

26. Instead they are talking about a bank bailout. What did we get out

of that?

[DCBob]

10. Republicans must "admire" the Greeks for their anti-tax sentiments.

[davidwparker]

37. +1

[Possumpoint]

2. Have to agree

The best path for Greece is the one Iceland took. In the near future, when the Greek Politicians realize that they could run things in the black with out the interest payments, default will look real good to them.

[tama]

4. And then

it would make sense to pay taxes. Not so when tax money goes to interest for debtors.

[bossy22]

8. huh? that makes no sense

interest goes to the creditors, not the debtors. Also your debt is an "obligation" to pay. That's like saying that you all of a sudden one day decide "you know what, I'm going to stop making my mortgage payments and use that money to buy a big Home theater system"

[tama]

12. Sorry, my bad english

creditors, not debtors.
Background: there is a popular movement in Greece against paying taxes to their current governement.

Larger context:
Neocolonialism works like this: A corrupt governement takes loan from IMF and other Big International Capital banksters. Then the corrupt governement delivers fruits of labor of the people + the natural resources to the bankster class. The corrupt governement does not represent the interests of people, it is an occupying governement on the behalf of IMF and banksters.

That is why people in Argentina, Bolivia, Venezuela, etc. Latin America revolted and kicked out IMF and other international robber banksters. That is why people of Iceland revolted, that is why people are rebelling in the squares of Greece, Spain, Portugal, NYC and elsewhere.

As long as governement is not of and for the people but occupatory force keeping people in debt slavery and representing the interests of banksters, the governement is going to use tax money to keep banksters happy and create more and more efficient tools of repression.

[bossy22]

15. So, the greeks are angry that they have to pay back money that they borrowed?

and so they just won't pay it? Sounds kind of irresponsible to me. No one forced Greece to borrow money- they had a choice- either Default or borrow more money. They chose to borrow more money.

Also, lets get some facts straight- its not just banksters and the IMF (do you know where the IMF gets its money from?) that are lending money- its also the French and German taxpayers. While I agree that Greece should default- I don't try to wrap it under the auspices of being "socially/morally responsible".

I feel bad for the Greece but that doesnt mean I think they are absolved of all responsibility in the matter. They made bad decisions, hid their true finances so they could join a currency union and now its time to "pay up"

P.S.- I do agree that the IMF terms are harsh and almost contradictory- they want massive spending cuts and increased economic growth, both are mutually exclusive in the short term.

[DCBob]

17. some here blame much of the world's ills on IMF and other global funds..

Clearly they do get some of blame but not all of it... its just not that simple.

[tama]

18. Fractional reserve

We should be all wary of paying hard earned money + interest on top for the 90% of thin air, money created from nothing by banks with fractional reserve of 10%. It's nothing but a Ponzi scheme, a Global Ponzi scheme, and AFAIK Ponzi schemes are considered illegal and immoral.

French and German and other taxpayers didn't loan to Greece, banks did. Taxpayers everywhere are forced to pay for banksters by corrupt governements, national and EU. Taxpayers everywhere are starting to wake up everywhere and demand freedom from debt slavery to Ponzi scheme of IMF and banksters.

[bossy22]

23. French and German Taxpayers are paying

Look up the European Financial Stability Fund- Why do you think Merkel's party suffered huge losses in the elections- the taxpayers are sick and tired of paying for other countries mistakes.

What does fractional reserve banking have to do with this? Its the only way that a modern banking system can run- if not how could a bank hold your money and also give you a mortgage at the same time? Unless you turn banks into nothing more than giant vaults and have the lenders as completely separate institutions it just wont work- and even if you did, the underlying numbers would force lenders to charge almost 100% interest on their loans since 1 loan would have to be able to lend another- it just wouldnt work.

I think you should do a bit of research on the modern financial and banking system- there are many good resources on the web.

[tama]

27. That's the point

people are opposed for the Financial stability funds that EU and governements keep pushing, because they are for the benefit of banking industry and against the interests of people. Sure, the mass media has been spreading a lot of divisive ethnic propaganda and many have fallen for that too, but let's not in this forum.

I would say that especially since 2008 the evidence that fractional reserve banking by fiat does not work has been building up in very convincing ways - it's the elites themselves that keep yelling that the whole house of cards is falling down any minute (if there is no more bail outs for bankrupt financial institutes by working people). Internet and library are full of alternative money systems, I hink you should do a bit of research and give the matter some independent thought, if you are capable.

[bossy22]

29. There is no other workable alternative

I don't think you even understand what fractional reserve banking is.

So are you saying that its in the interest of the people to destroy the banking system? Pretty interesting since our current economic woes are greatly due to the collapse of the banking industry- mainly Lehman Bros. Do you know what happens if those banks all go under? Students won't be able to get loans to go to college, small businesses will not be able to get credit to fund their operations, credit cards will disappear, etc...every form of credit will dry up. Oh and all you're money in the bank...well you will get it back- just a few months later when the FDIC sorts everything out- so good luck living on whatever you have in your wallet (oh and did i mention credit cards won't work either since there will be no institutions willing to lend).

There is no healthy main street without a healthy wall street- a financial crisis brought upon by the collapse of major banking institutions brought down the general economy- do you need anymore proof that its not a good idea to destroy the banks?

[tama]

32. The banks cannot be saved

all attempts only produce more misery. You tell me that you are young and have lot to learn. Learn this:

Current financial system is dependent from continuous growth, because it's based on taking interest. That's very simple math - as a whole, it needs to be growing or it collapses. Continuous growth of financial sector is dependent of continous growth of real economy. In finite world with finite resources continuous growth of real economy ad infinitum is not possible. The writing is on the wall that we have allready passed the point of no more growth of real economy (Peak Oil etc.). That is the real reason why the house of cards or ponzi scheme of financial system is collapsing.

We are living interesting times. Happy to be here with you! :)

[bossy22]

6. Iceland and Greece don't have the same problems

Iceland's problem was her banks were overbloated with debt and the country was just too small to bail them out- therefore they defaulted. iceland herself, never defaulted on her sovereign debt though so the country didnt default- just its banks. Greece on the other hand will not only have to endure a bank default but a sovereign default as well. Letting the banks "go" will just solve part of Greece's problems.

Also, Greece is alot larger than Iceland in financial terms and has to actually look at the effects on the global financial system its default will have.

while I agree that the best probable course for Greece is to default- its just not as simple a solution as it was with Iceland's banks.

[DCBob]

9. in addition Iceland is not part of EU so what happend in Iceland had minimal impact globally.

A messy Greek default on the other hand affects the entire EU, the Euro and potentially the entire world.

[bossy22]

11. Exactly

thanks for adding that.

[DCBob]

14. Merkel just said today a "Greek default would destroy faith in Europe"

http://www.reuters.com/article/2011/09/25/us-eurozone-merkel-idUSTRE78O2PR20110925

Clearly the big players will do whatever it takes to avoid that ugly scenario.

[tama]

36. There is serious doubt

that Merkel, Sarko, or any European Prime minister or President is a big player... the word on the Euro-street is that they are clueless, boring, and not worth listening any more, except for entertainment value.

Big players are ordinary people, those of us who get pass the fearfull phase and then pass the angry phase, and stop playing power games and start playing win-win games.

[bossy22]

40. They seem like pretty big players to me

You don't seem to get it- a massive financial crisis WILL HURT ORDINARY PEOPLE...this isnt just imaginary or something the "evil banksters" tricked us into believing. All the proof you need is in the jobs market- the 2008 financial crisis CAUSED MILLIONS OF AMERICANS TO LOSE THEIR JOBS

I understand what you are saying- that essentially money isnt everything- and you are right, but money in today's modern society is very important and not much is going to change that. IT doesnt matter whether ordinary people will "wake up" and stand up to those evil banksters- they will still be out of work, out of money, and "out on the street". What you are advocating may be ideally true but its practicality makes it false. In essence, its like the "sovereign citizen" arguement- they may be right, but in the end if you don't pay your taxes you will wind up in jail

[tama]

41. We hurt allready

and we hurt like hell. Banks and corrupt politicians owned by banks running things hurts us and is only going to hurt more. They can't help it, that's how their system works, it continues to exist only by hurting us more and more, ordinary people. All over the globe. Not just America, everywhere.

This is revolution. No, we can't save the system even if we wanted, and why would we, really? This revolution is not about bringing the system down, no the system is collapsing anyway. This revolution is about living beyond the collapse, and living better, as free men, if we have the courage and dignity to do so. This is a revolution of acceptance and adaptation. Evolution.

[tama]

13. Details vary

but the underlying problem is the same everywhere - debt slavery of we the people (99%) to banksters (1%) who control corrupt governements that took or allowed the debt in the first place.

There was a big campaign not so long ago to cancel the neocolonialist debts of developing countries. Now that many European countries are also being neocolonialized by IMF etc., people are starting wake up also in OECD countries, occupying Wall Street etc.

[bossy22]

16. ummm not really

There is no underlying problem- what you are talking about is the modern financial system- one that has been around since the time of the Romans. It's called CREDIT.

Also, debt slavery is not an accurate way of describing the relationship between the debtor and the creditor. Essentially the relationship is a partnership- both hope the other days well because if one goes down- so does the other. Do you think banks make loans hoping homeowners default? In reality, NO- cause such an action usually ends with the bank LOSING money- its in the banks interest for you to payback in full and on time- therefore its in the bank's interest for you to be prosperous.

whole sale forgiving of debt is dangerous- it ignores all the counterparty risk and derivative exposure to said debt.

[tama]

19. Your invested in the market?

Afraid of losing your capital income?

[DCBob]

20. we all have skin in the game.. whether directly as investors or not.

no one will benefit from a global economic meltdown.

[bossy22]

22. People don't realize that

if another financial crisis happens- good luck with your credit cards, student loans, car loans or any other form of credit you may need.

[DCBob]

24. no doubt. it will be an ugly situation for all of us..

in fact it will likely hurt the poor and most vulnerable the worst.

[tama]

28. That's partly true

e.g. pension funds gonna evaporate with financial meltdown, And we do need - badly - alternative forms of social security instead of investing funny money in the market that is dependent from continuous growth, which fucks up this planet we all depend from.

We are past peak oil and energy consumption per capita can only go downwards, carrying capacity of the environment is still deteriorating at increacing pace, social contracts between corrupt governements and the people who are served nothing but "austerity" to keep on feeding bank bailouts are breaking up... this is a systemic crisis, nothing more, nothing less. The times they are a-changing and we are the ones that we have been wating for.

[bossy22]

30. maybe there just isnt another alternative when it comes to retirement

The only other method i see is hiding a little bit from your paycheck every week underneath your mattress.

I'm sorry, the market based retirement system (Along with SS) seems to work just fine for 99.9% of the people who use it. Almost any CFA (certified financial advisor) advises you to atleast put some in the market- i guess they are those "evil banksters" so i'm not surprised.

And yes- we do all have skin in the game- directly or indirectly. Do you have a credit card? Do you have your money in a bank or credit union? Do you have a job? If you answer yes to any of those then you are affected by the market in some way

[tama]

33. Of course

we are all in the same boat. I've lived in ecovillages that ain to live self-sufficiently and sustainably by small scale gardening etc, without money or with local money systems. And they are also in the same boat, they are moving into good direction, but they are not enough. We can't all turn into self-sufficient gardeners in a short period of time.

But it is equally foolish to presume that money will take care of our old people and others in need of help. Money does not, only people do. I'm moving closer to my father, who is getting old and bit lonely, to be able to help where and when he needs help - and to receive from him what help he can give. The simple truth is that money will not solve our problems, only help comes from people helping each other. If we don't know that, we have been raised badly and we have done terrible job of parenting, and we need to keep on learning.

[Selatius]

38. The markets aren't a good place for investment without stern regulation.

It was this binge of deregulation that led to rampant fraud and the peddling of unstable securities.

[bossy22]

39. I disagree

it depends on the market. Any large exchange traded market- where securities must pass through a clearing house are usually safe. These are Bonds, Equities, Options, Futures...etc. Where the danger comes in is when you start doing OTC (Over the counter) financial products because such products are not as transparent as exchange traded products. Also there is limited liquidity in many instances (unlike a major exchange traded product where there is usually an ample amount of buyers and sellers)

[Selatius]

42. Therein lies the problem: OTC. The loophole that nearly took us into the Second Depression. nt

[boppers]

43. "we all have skin in the game"? Uh, no.

Some of us, being the vast majority of humanity, aren't rich enough. I'm just on the threshold, but I lived for years without loans and banking, because I wasn't rich enough to have a bank account.

I just recently got so rich that I can even afford to pay a bank to tell me how rich I am.

[bossy22]

21. Yes, I am invested- but i fail to see what that has to do with it

Am i afraid of losing money because of this- not really, I know whatever unrealized losses occur I will probably recoup them when the market recovers. I don't play the foreign bond markets much- I'm in large cap equities and I also am involved in derivatives (specifically Options).

The thing is I am young- I can afford losses, people who are about to retire or those that are retired and live off dividends stand to lose alot- not to mention all those pensions that are market linked

[tama]

31. We have tendency

to become possessed by our possessions.

You are young and I have two children, 12 and 7. This current system is just piling up debt and environmental degradation for future generations. Like the Greek god Chronos we, as a society and economic system based on debt and interest, are making a living of eating our own children. This can't continue, and I would like to have a transition as painless as possible to a world where every child has a decent chance of living a good life.

[bossy22]

34. and who wouldnt?

The problem is there isnt any workable alternative- or atleast one that wouldn't cause massive pain for the current generations. I'm all for hearing any suggestions but I just don't see it- therefore it makes the most sense to try to make this system as healthy as possible rather than destroying it

[tama]

35. Oh there are alternatives

and every great thinker has the best suggestion there is... and endless discussions and flame wars for and against this and that ideological utopia of how world SHOULD be... great fun, I recommend! :)

But I'm getting old and try to keep it simple. A bit of confidence in younger generations and human creativity and compassion and ability to self-organise when we are free to do so - necessity is the greatest teacher. We don't have to decide how or what the future utopia should be, but we can let go of fear and control mania and agree to avoid dystopian future and present, and then let things sort themselves - with a bit of confidence that compassion is our natural state, and currently we are just bit collectively insane because we are hypnotized by money.

[Yo_Mama]

25. It's no longer true

The "primary deficit" is the measure of an economy's revenue - ongoing expenses. The ongoing expenses do NOT include interest on debt.

Greece had been running a primary deficit for some years, and then by last year increased revenue and cut spending to achieve a primary surplus (such as Italy had been running before the depths of the 2008 crisis). But that all changed this year!


That graph is from this blog post:
http://lolgreece.blogspot.com/2011/08/primary-deficit-enters-twilight-zone.html

Greece cannot avoid default now and pretending it could earlier has totally crushed the economy. Lord knows what will happen.

I recommend the blog which is written by a Greek. Quite a bit of it is in Greek, but some is in English. You can use Google Translate, though:
http://translate.google.com/translate?sl=el&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Flolgreece.blogspot.com%2F

Greece is going to default massively.

[DCBob]

7. US stock futures are actually up moderately at the moment..

suggesting some investors think the deal being worked on may help contain the contagen.

http://www.bloomberg.com/markets/stocks/futures/

Looks like consensus is building for structured Greek default with bond holders taking a significant haircut.