Topic: If Greece defaults/collapses anything is possible (Read 5989 times)

Not for the British Empire, it never really collapsed, but simply transferred primary dominance from Britain to the US sometime during WWII.

Sounds about right. This exact same folly ended it all for the mighty Roman Empire, the British Empire and even the Nazis (debatably).

Empire maintaince and expansion, and the cost of a military of worldwide reach and scope.

I stand corrected. Shouldn't use wikipedia for my sources:
http://en.wikipedia.org/wiki/United_States_public_debt#Ownership_of_debt

That $1 trillion are China's holdings of treasury bonds only though. Do you know how much private debt they own or how much USD they hold in reserve? That is not taken into consideration in the treasury debt, if I'm not mistaken?

Anyway, it's besides the point. I was speaking in hyperbole.
I obviously don't believe that china owns the USA... not quite yet, anyway.

But how the hell does one nation still blow through $15 trillion in the space of a couple years, when the government spends virtually nothing on evil 'socialist' economic programs? The debt was minuscule in comparison not 10 or 15 years ago.

If your going to correct someone it is a good idea to be correct first ....

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

I was admittedly speaking in hyperbole.
About 35% of the total debt of $15 trillion is owed to various foreign investors.
China owns about 16% of it, or about $2.4 trillion - quite a chunk.

Hyperbole.
1) US owes China $1B.  The largest holder of US debt is .... US Citizens, pension funds, insurance companies, social security, etc.  Most of Greece debt is held by foreign entities (which mean interest payments are a transfer of wealth from Greece economy to outside interests).

2) Breaking it down by citizens is misleading.  Per capita income and per capita GDP is much lower in Greece.  Debt in Greece is 150% of GDP which is a staggeringly high number.  When you combine it with flat growth, current year deficits, short maturity, and high interest rates the "service load" on Greece is staggering.  


US has fiscal issues but when you make a statement like it is larger than Greece when that is just nonsense and makes you look foolish.  1 billion dollar notes really?  If US did want to inflate our way out of debt inflation the value of dollar by 10% annually over a decade would cut the debt to GDP to <50% and foreign debt to GDP to <20% which would be one of the lowest among first world debtor nations.

Now not saying the US should do that but talks of billion dollar bills is just nonsense.

I think total debt is $15 Trillion, where China only holds ~$1 Trillion of that. (http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_holders_of_U.S._Treasury_securities)

By how much will the USD have to be hyperinflated to pay back that pesky $15 trillion owed to china?
That is almost $50,000 for every man woman and child in the country.
Greece's national debt is only $470 billion, or about $41,000 per citizen - thats $9,000 less per capita.

A huge chunk of Greece's national debt has come from guaranteeing bondholder debt, unlike in the US where one of the biggest banks in the world was allowed to fail. So how has the US managed to rack up such a ridiculous bill? Especially when they are not even providing social programs like most of the european states?

It would seem that the US has a bigger immediate problem on it's hands than greece does. The USD is losing is dominant role in world finance, and with it the economic and monetary hegemony held by the USA. I wonder how long it will be before we see 1 billion US dollar notes, or an outright default on it's national debt?

It will be the country that has the most guns, tanks, ships and fighter jets that will be the victor in all of this.

Greece's debt problem is that they can't print Euros like they printed their own currency into hyperinflation (re-denominated three times in 50 years). Actually paying off debt without being able to just print the currency into valuelessness must be quite the paradigm shift for them.

Greece 100 BILLION drachma note:

100% true. The politicians have not fooled us, we have been fooling ourselves for decades in the first place. The government simply reflects ourselves.

Just bear in mind that it would take a very rare, emotionally/mentally strong and educated person to resist Zero-Down-payment mortgages with 3% interest, outrageous pension entitlements (even if we didn't deserve them), government subsidies for entrepreneurship, tax deductions for every imaginable reason, and so on and so on.

Now that the truth about our financial state is apparent, more and more people realize the mistakes that we all did in the past years.

Had we not entered the euro, we would reach the same standard of living in 10-20 years more, through normal economy growth. But who would dare to speak about it before the crisis?

Unfortunately, this debt which is as you correctly say 0.3% of global GDP, is leveraged 40 to 1 in the best case (ECB) and over 100 to 1 in the worst (bye,bye Dexia). Greek default means that immediately the ECB is insolvent. This is why they agreed on a 50% haircut BUT NOT INCLUDING the ECB help bonds.

The endgame is now, not just for Greece.

Greece is something like 0.3% of the world's GDP.  Even with significant ownership of greek debt by big international banks, defaulting on a small percentage of global assets doesn't represent anywhere near the type of risk posed by the entire global financial system's potential systemic default back in 2008.

Besides, banks are holding on to more capital and have been playing it safe ever since the financial crisis started.  It's almost a non-issue, but the drums of fear beat strong to the ears of the economically clueless and incompetent.

Once this crisis is solved, watch gold collapse and the dow gradually build up to that mystical 36,000 number I read about back in 1999

Um, nothing explicitly stated such, but an implication was certainly present.  Is English a second languge?  Perhaps you don't understand what the word "implies" correctly means?

And don't call me Dick, Mister Cheney.

By and large, by non-Greeks.

Is Grece's debt owned mostly by Greeks, like in US and Italy, or by outside nations?

Nothing in my statement implies bankers haven't been doing this for years. Dick.

Not a student of history, are you?  "The bankers" have been doing this for hundreds of years.

+1

This is not just a european problem.

My observation of events was that Goldmann Sachs worked with Greece's "leaders" to gain the country entry to the EU by making them appear financially stronger than they were.  Austerity measures began immediately.  That's how the IMF always does it: create the debt, kill the economy, vacuum up the assets, fuck the people.  The bankers have been circling since 2010 when the first defaults were being negotiated.  Loans were arranged that could never be repaid because this allows the bankers to buy up the possessions of the people for pennies on the dollar.

The same process will be played out in the United States too, unless the people repudiate the debt and hang bankers from light poles.

Honestly guys stuff like this happens regularly twice a century in Europe.

First comes the financial problems,  like massive inflation (which Greece is about to experience when they drop the Euro... and Germany experienced in the 1930's)

Then comes the finger pointing and scape goating .. (clearly that's happening now as it did in the 1930's)

Then comes the protests (clearly that's happening now like in the 1930's)

Then comes one country saying "f this...  it's now or never"  ...  within a matter of months someone starts shooting...  then others.. then others...

History never repeats itself,  but it often rhymes.

Trust me guys... if history is any indication (and it appears it is in this case)  their is going to be blood in the streets of various European capitals within a matter of months...   I don't think Germany will take it well when they find out they are not going to get paid back from the greeks... and when the italians default as well as the spanish you are going to see something that you haven't seen in 70 years.

Doubtful.

Greek protestors "fostered" that debt on themselves.

It is called a massive welfare state where nobody pays taxes.

I'm looking forward to the Greek people refusing the debts that their so-called "leaders" foisted upon them, just as Iceland did.  I am also looking forward to the Occupy protests continue to gain steam in the US and around the world and result in the American people repudiating the debts foisted upon them.  These are certainly interesting times.  Will we see bankers hanging from light poles?

Broken Promises.  Broken Dreams.

All that's left is to sweep up the pieces and move on.

I wonder if that's because the government said "pay your taxes and we'll provide R, Q, W, X, Y, and Z and you won't have to worry about them".

It's much too late for that.

The "I hope they fail" sentiment arises because people are sick of having their tax dollars given to those who don't deserve it. This is a pretty core human feeling being triggered. I think there's a perhaps sub-conscious realization that things will indeed have to get very bad, for everyone, in order for the status quo to change much. Hence the willingness of some to hope for a system(world)-wide blow-up.

It could be really bad, or it could be like Iceland's default.  It had winners and loosers, but it did not cause a long term meltdown.  

http://www.bondvigilantes.com/2011/09/02/ireland-austerity-vs-iceland-default-whos-winning-and-a-twitter-update/

..i hate market-zynism..

just because you don't like capitalism (i don't like it neither!!) you do not have to hope everything will collapse and be destroyed.
In fact: if greece collapses, NOBODY will be better of. for both the ppl of greece and the european union i hope a default will never happen!!

shame on you for getting exited and all horny about a whole country going up in flames and not beeing able of maintaining even the most essential interests of its people!! 

Does not compute!  You can't peg one currency to another currency and then print as much as you want.  Sure you can say it is pegged but people will trade at what the market believes is the comparable rate not the official rate.  Ask Zimbabwe.

Plus Greece doesn't have the foreign currency reserves necessary to keep their exchange rate pegged.  The Chinese central bank can do this because of their massive holdings of dollars & Yuan.  They actively trade in the market and use their large capital position to make trading against the central bank a losing proposition.  As long as the market has "faith" in the central banks ability to hold the peg the peg will hold. 

Not only does Greece not have the foreign currency reserves to pull this off they also don't have the fiscal or monetary discipline of the Chinese.  The more national currency they print out the harder it becomes (and the more foreign currency reserve it requires) for the central bank to hold the peg.

If the peg fails well that is a vote of noconfidence by the market and the currency will be crushed as all that trading pressure accelerates as people jump in with levered positions to gain from the cental banks failure to hold the peg.



Yeah unlimited govt printing backed up by nothing except the awesome fiscal responsibility of the nation of Greece.  I would love to see the FOREX markets open on the GREEK:EURO cross when that happens.

Greece could print their own currency and fix it to the Euro. Then they could print as many Euro's as they like and get out of debt.

This new Greek currency could be printed by their government debt free (not through the FedRes debt system). They can avoid inflation by setting legislative limits on the fiat printed. People need to realize that the power to print money is better in the hands of a politician than a banker.

Actually, even after they joined they had inflation.  They just fixed the numbers so that it didn't look like they did. 

Uhm.. not really.  They are protesting because they are being asked to pay their fair share.  Greeks are notorious for circumventing and avoiding the payment of taxes.

That's it exactly.

Oh, cmon. ‘Kick them out’. International tribunal trials for Merkel/Sarkozy in 10 years’ time and Papandreu is a new Greek hero/demigod. This will be delayed/renegotiated/dragged into oblivion.

Rich/mc people’s cash is offshore, Greece’s working class is non-existent and cannot bear inferior currency forced through public worker’s salaries/outlawing/military rule/etc. Step down and you have bloodshed. As they are now it is far cheaper for Merkel to keep/support them within euro then force them out and support them afterwards. The thing is, as I fear, those plonkers may choose otherwise.

They get thrown out.

That is not what I meant. It is the skewed people’s perception that makes them take those terms literally/disallow any practical correction and go on strike moved by a fellow idiot, in turn pushing their PM to drastic action.

Anyway the point is that EU governments' debt was to date considered virtually risk-free mostly due to governments’ ability to issue currency and thus controlling it. This is now invalidated by euro experiment. (Full stop here.)

But practically, how does GR gets out of euro? Surely no-one would want to voluntarily exchange/give up euros for drachma/whatever when it is certain to lose its value faster than BTC recently with no hopes of bounce backs at all? Can Greek-printed euros be withdrawn or sumsuch?

Because they are not solutions to the underlying social problems that begot the debt to begin with.  It's akin to a middle class family that can't pay the rent because of their oppressive credit card debt payments choosing to apply for another credit card to pay the rent.  Eventually the creditors are going to get wise.  Considering that Greek debt on the secondary market hit an effective interest rate of 205% today, I think that those creditors have already done so in Greece's case.

http://globaleconomicanalysis.blogspot.com/2011/11/greek-1-year-bond-yield-hits-205.html

Why do most consider these solutions as short-term? These ‘bailouts’ are perfectly flexible and should be viewed as such. Papandreu guy just got too greedy and decided to threaten Germany/France with his ‘referendum’ so they ease the terms a bit. What is fukd up is that those ‘policy makers’ in Eurozone do indeed hate each other badly and may do stupid things despite all the cash shoved into their gaps.

It's misleading to lay the problems at the feet of any single politician. Politicians are the mirror of the society that elects them, and thus the blame for Greece's troubles is more correctly placed with the large group of people who've sought government solutions to problems in too large a degree for too long.

The same is true for the US - Obama is not really to blame for the real fundamental problems. Rather, it's a couple generations of people who've grown up to believe Government should provide for them.

We had to opt out of FTSE tracking on all of our major policies/investments nearly 2 years ago for obvious reasons. UK government stopped issuing any risk-free products that can beat the inflation 5 months ago.  Now these tax-evading lazy eurozone PIGS plonkers are seriously hurting even solid companies here and over the pond by playing their senseless racial politics. I do not even want to think where that leaves people to invest.

Modern Greece has never be able to maintain solvency since it gained Independence.  

In past 200 years it has spent over 50 of those in active default.  It has never had a balanced budget, and before it joined the Euro it had rampant monetary inflation on top of unsustainable debt. So yet another default is unlikely to change anything in Greece.

Argentina could be analogous to someone who had good credit, got cancer, blew through savings and had to file bankruptcy.  Greece is more like the guy who has never paid a debt on time and filed bankruptcy 14 times in last 60 years.  One more isn't going to change anything.

While this is true, look at Argentina now.  That was less than a decade ago.  If they had chosen to pay, they would still have people dying on the streets.  (On some level, they still do, and every other nation on Earth as well; but on a relative level, Argentina would still be laboring under the weight of the IMF if they had accepted the terms)  This is pretty much the same conditions that Greece is in now, with the additional problem that Greece does not have control over it's own fiat currency and the other EU countries that use the Euro are going to suffer some significant knock-on effects regardless of what Greece does next.

It seems impossible to pay but in reality there's a lot more that can happen... looking at the history books there's no limit to the inhumanity of what can happen over debt. Perhaps a group of muslim countries could buy half the country and call it Palestine!

They should default ASAP like Argentina did in 2002. That will be hard too though. When Argentina did many middle class people in particular couldn't get drugs and died evicted.

Yeah.  Nothing about the required public sector job cuts that are simply unavoidable.  Not protesting about raising income tax and actually collecting taxes (Greece has lowest COLLECTED taxation per capita in the EU).  Not protesting about raising govt funded retirement to .... wait for it ... 60.

Yup they are completely realistic about the pain of austerity that is going to happen one way or another.  Salt of the earth.  

They led THEMSELVES into a shitty situation.  Greece has a "France/Germany" size social programs finances on a tax basis of say Uganda.  Tax evasion is a national past time.  I mean you can have low taxes or a welfare state but you can't have low taxes AND a welfare state.  Something for nothing is always fun until the music stops.

They protest cause they are tired of a fail government that led the whole nation to that shitty situation. They keep paying and paying while the government just waste and waste and now THEY have to pay more to fix all the government fail. Of course they protest!

That actually depends upon who we are talking about.  The Greek people are no more a homongenous whole than any other society.  If the Greeks repudiate the government's debts, and form a new government quickly, it's just as likely to be beneficial in the near to middle term (5-10 years) for the Greek middle class.  If they go with the plan as it is, even if it works (which is extremely unlikely), it will be at least a decade of austerity.  The time frame matters in the same way that a length of a criminal sentence matters.

Greece will default eventually.  It was inevitable two years ago.  We are just watching the stages of civil collapse occur on a modern timescale.

http://cluborlov.blogspot.com/2008/02/five-stages-of-collapse.html

Shortly after it becomes obvious to the majority of the European public that Greece will collapse, it will likewise become obvious that so will Poland, Ireland and perhaps Spain.

If Spain fails, the EMU fails.  If the EMU fails, the Euro fails; and europe will likely collapse into a renewed state of nationalism and distrust of each other.  Likely also followed by a hot war as long repressed tribal greivences return to the surface of public discourse. 

It is far too late for this to be an orderly or civil form of contraction, as far as the European Union is concerned.  I'm not sure about the United States.

But that isn't why they are protesting.  They are protesting because the austerity asked of them is "too much".  That is the irony.  If the protestors get their wish and the bailout fails, their debt defaults, and they are kicked out of the EU the austerity that will be imposed on them by the financial markets will be many times more severe.

As long as the Greeks have the Euro the problem is only going to get worse.
So the sooner they do this the quicker it will be over.

The funny thing is the idiots in Greece have no idea the pain that will come with collapse.

They are protesting the austerity measures which only limit the amount of money Greece can CONTINUE to borrow.

If the debt collapses and Greece is ejected from the EU it will have to face real austerity because it will be unable to borrow anything

Greece should default.  They really are too far gone to do anything else.  All of these 'bailouts' just hide the problem and even continue Greece to keep building more debt. 

By anything I mean that as soon as the current system fails, a new system is bound to take over. Let us all hope that Greece will keep skrewing up and finally go bust. That may allow for Bitcoin to be accepted as a safe haven and a respectable option instead of fiat driven currencies that are defined by scams, corruption and fuck ups all the time.

Great to have you run a country into the ground Mr. Papandreou.