POLL: Greek Debt Default?

Your link closes with the implied question:
"whether they (or any other electorate) will put up with five years of pain is another matter."

I think they will as the alternate is much worse. For example if they default on their bonds, they will have no credit for at least 5 years.
As they already are spending much more than they collect in taxes, etc. without credit they will not be able to import fuel for cars and power plants.

I.e. living without gasoline and electricity will be much worse than a modest reduction in salaries and benefits.
Big oil has this nasty attitude that they want to be paid for fuel deliveries.

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BUT, do most people actually THINK more than 5 months into the future, let alone 5 YEARS! I don't think so. BUT, maybe they will.


I was thinking, right about now Greeks would do good to start a war. I think this would have been the response of many other governments past and present.

*cough cough*War on Terror *cough cough*

 

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Attack the Euro (3/14/2010)

Since Iran abandons dollar for Euro in its oil trading, a weak Euro would significantly hit Iran's economy. I saw in each attempt to have a war on Iran, it used to be followed with a plot to hit the Euro. The typical samples were: In January 2007, Russia had a dispute with Belarus and shut off the oil pipe for several days. In August 2008, Russia invaded Georgia where there was gas pipe line to Europe. In both events, if the crisis brodened, The oil and gas to Europe would have been cut. The European's economy would have been hurt and Euro would have depreciated. So would be Iran.

See "462. The collapse of Euro and worldwide economic crisis (1/20/07)" and "565. Georgia war and Russia, their role in Iran war (8/19/08)"

The resource to sabotage the Euro by the failures of energy supply exhausted. The plan to have war on Iran doesn't go through yet. What's next? We see the international financial speculators again.

You may have noticed that started from later January, the financial crisis of Greece became a hot topic in media. In article "The Bond Vigilantes who left Greece in Ruins" (Business Week 2/22/2010), the writer says, "On Feb.10, striking labor unions shut down schools,.....

As of Feb. 10, European officials seemed to be angling for a compromise plan to aid Greecebut on such harsh terms that no one else would want such a deal. .....

In the month through Feb.10, the yield on the Greek government's three-month bills soared from less than 1% to 4%....."

The timing reminded me of the Feb. 13 Chinese New Year's dinner plot. The Greek's financial problem was created for that plot. If the 2/13 plot went through, then there would be "terror attacks" which would have justify the war on Iran. At the same time Iran would have suffered a blow in its finance too - a devalued Euro. All these didn't go true because the 2/13 plot went soured.

Who created that crisis? In a meeting with President Obama on Mar.9, Greek Prime Minister George Papandreou called for a clampdown on financial speculators he blamed for worsening his country's situation. Who are those international speculators? Goldman Sach was picked up particularly: "Goldman stars in this Greek tragedy - The firm's currency and bond deals for Greece have drawn fire" (Business Week 3/1/2010)

Russia had disputed over its neighbor countries(Belarus, Ukrain, Georgia) with attempt to shut down the oil and gas supply to Europe. Now it's the PIG'S four countries. (Greece, Irland, Puteguese and Spain). They will appear in turn to pull down the Euro once there comes a renewed Iran war plot.

 

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Jim Jubac states:

"... Not only is the public sector the target of most of the cuts, but it also provides 40% of the country’s jobs. That means any budget cuts stand a good chance of sending the country’s economy into a tailspin. Falling economic activity would reduce government revenues, increase the budget deficit again, and create the need for even more cuts. The Greek government has already reduced its forecast for economic growth in 2010 to -2% from a prior -0.3%. ..."

More at: http://www.moneyshow.com/investing/Jubak_Blog.asp?aid=Jubak_blog-19237

 

maybe it just forces some people to save less of their earnings

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What fraction do you think they were saving, if it is now to be less?

As Americans were negative fraction savers, until last year, I bet the Greeks, especially those with "secure"government jobs, were negative savers too.

 

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"German Chancellor Angela Merkel has said she wants the eurozone to be able to exclude one of its members in future if it is necessary to avert a crisis.
Mrs Merkel told the German Bundestag (parliament) that existing EU rules were not strong enough to deal with the current crisis triggered by Greece.

Exclusion from the 16-nation eurozone would be a "last resort", she added. ..."

From: http://news.bbc.co.uk/2/hi/europe/8572257.stm

Billy T comment:
Also yesterday Germany reversed its POV and called for the IMF to help deal with the Greek (really the PIIGS) problems. Earlier this was considered to be tabu as the EU can take care of its self - is not some thrid world country needing both management and money from the IMF.
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"Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package. Papandreou said he may turn to the International Monetary Fund to overcome the debt crisis unless leaders agree to set up a lending facility at a summit March 25-26. The IMF option has already been dismissed by European Central Bank President Jean- Claude Trichet and French President Nicolas Sarkozy, who say it would show the EU can’t solve its own crises. ..."

From: http://www.bloomberg.com/apps/news?pid=20601087&sid=ag_cwqJcUj_c&pos=2 (Posted by Bloomberg just a minute ago.)

 

Why? The savings rate is driven by demographics (ratio of workers to retirees), so unless Greek demographics resemble American demographics there's no reason to think they'd exhibit similar savings rates.

 

I do not see it that way. Certainly the retires tend not to be big savers. (I am a strong exception as I can easily live on just my Brazilian investment earnings yet have currently 64 stocks in my TD AmTrade account and large retirement plan funds growing larger every year. This because my personality is mainly "Annal Retentive" - formed during my youthful years when quite poor)

But in general the saving that is done is done by the workers, but again it is personality that determines how much. What you suggest, (ratio of workers to retirees) has very little to do with it.

Consider Japanese: they have an aging population which lost everything in WWII and that shaped their personalities, much like my lack of funds did. Those retires often are savers and even even deposit into bank accounts paying negative Interest! - it is just their nature.

In contrast the Go-Go youth of the USA should have been saving, but spent more than their income.

To over generalize, if you have experienced hard times in your formative years, you will try to save most of your life. If you were indulged during that period with most of your desires fulfilled, then even when you should save you do little of it; you may even borrow to live "higher on the hog" than you can afford. Much of the debt Joe American built up is due to fact WWII was economically good for him instead of destroying his wealth.

 

Retirees as a group are spenders, not savers. Their net savings rate is strongly negative.

It's not "personality." It's a combination of current expenses (especially children), expected returns on current savings, access to credit, and expected future retirement benefits (from the government or wherever).

If by "it" you mean the savings rate of current workers, you're correct in so far as the workers are not expected to take care of the retirees directly (as is the case in most developed countries). But the ratio of workers to retirees is the single most important factor in determining the total savings rate of any country.

No they don't. You appear to be relying on data from the 1980's. Japan's savings rate has collapsed over the past few decades as the population has aged, and is currently at similar levels to Europe and the US.

Where?

 

Not nearly equal saving rates now (With low interest rates and prices rising, Joe American has his credit cards out again, not so in Japan):

“… Another interesting data point is that {US} national savings reached a new post-depression low. Gross national savings was only $1370.2 billion (or 11.0% of national income) while net national savings was -485.6 billion (-3.9% of national income). Usually the national savings rate is pro-cyclical (increases during booms, decreases during slumps), but during the current recovery it has continued to fall. This is in part the result of the large and increasing budget deficit, and in part the result of a decline in household savings due to low interest rates and rising asset prices. …”
From: http://www.csmonitor.com/Money/Stef...10/0313/US-national-savings-rate-hits-new-low ( a blog article in The Christian Science Monitor dated 13 March 2010)

“…In reality, {Japanese saving rate} has fallen dramatically, from 14% in the early 1990s to 2.2% in 2007 (latest year available, I suspect it fell further in 2008). To the extent the savings rate is related to the economic crisis, it is because the savings rate is too low, and not too high, as the low savings rate means that the investment rate will be too low.

It is true that the decline in the savings rate is to a large extent related to Japan's rapidly ageing population, which means that fewer people are saving for retirement and more people consuming their retirement savings. But that doesn't change the fact that savings are at an historic low in Japan, and that weak consumer spending growth therefore is a result and certainly not the cause of Japan's economic problem. …”

From: http://stefanmikarlsson.blogspot.com/2009/02/new-york-times-misleading-article-on.html (The same blogger as before, but this in the NYT. The last quoted paragraph does support your (and my) point of view that retires are on average non- savers. (I noted that I am an extreme exception to this general rule in my post.)

I think in both the US and Japanese cases the fact that prices are static or declining also delays discretionary expenders so the money not spent is saved. I do not know about current Japan, but currently prices are again rising in the US, so this is part of why the current US saving rate has nose dived. It was approaching 5% when US had deflation last year – buy next month cheaper. Part of the FED’s plan is to bring back modest inflation to get people spending – that is now working. It may be uncontrollable inflation soon if FED does not soon turn off the new money faucet.

PS, I am not ignoring your final question "Where" - I just did not understand what you are asking.

 

More bad news:

NEW YORK (AP) -- Stocks plunged around the world Tuesday as fears spread that Europe's attempt to contain Greece's debt crisis would fail. The euro fell to its lowest point against the dollar in a year.

Stocks have seesawed in the past week as Europe's efforts to agree on a bailout package for Greece proceeded in fits and starts. An agreement finally came together over the weekend, but its ballooning size of $144 billion has investors worried that Europe would have an even tougher time assembling an aid package if a larger country such as Spain or Portugal were to get in trouble.

One of the market's concerns now is that weakening economies in Europe could jeopardize the recovery in this country.

While Greece's economy is small, investors worry that other cash-strapped European governments could follow Greece into asking for emergency loans. Markets have been increasingly skeptical that Europe can act on its own restore the credibility of its shared currency, the euro.

"Everybody is worried about who is going to be next," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York.

http://finance.yahoo.com/news/Stock...tml?x=0&sec=topStories&pos=main&asset=&ccode=

 

Probably not this year but I think there will be a default before end of next year. I will also go out on limb and tell how this Greek Tragedy ends:

The drama will return and be used to pay government bills (and accepted by government when collecting taxes.) The Euros people and government have will be used to pay for imports and little used internally (too valuable for that). The market place will establish at least daily how many dramas are required to buy a Euro.

Also to go foolishly out on a twig: By end of 2011, it will take more than 1.5 dollars to by a Euro!

I did not vote because I don't know how I should as question does not tell "by when" - If you wait long enough even Greece will not exist.

 

even when it is Germany and France that will not allow them to fail at the moment.

Now i see why Britain said naw, we like things our way, they were probally worried about having to bail out countries like The Greeks. After all the bugs are worked out of the Euro though Briton may decide to join, and front the 500 billion or so to join.

 

I think the ECU should offer a good realistic plan for salvation as they have done. And if the Greeks refuse, they should kick them out of the ECU. If the Greeks cannot understand and/or are not willing to change their friviolous spending, then they are welcome to strike out on their own.

The bottom line is the world does not need Greece. Greece needs the world. Maybe they need to learn the hard way.

 

Greek strikers hit Athens streets over austerity plan today

There's no way in Hell that Greeks are going to pay back their loans. It isn't going to happen. Greeks like easy money, paying it back, well, that's a different story. That's the problem with all of us (as a whole). Including the USA. Like the women who wants the government to cut social spending because she doesn't support a welfare state but at the same time can't wait to get her SS check because she never bothered to put any money away for her retirement.

Greeks are just a mirror image of us.

Sure, for now the Chinese are happily working for nothing to make crap for us in exchange for massive investments and technological know-how. That equation isn't going to go balancing for forever. They work, we spend. WHO builds an economy based on THAT sort of system? When it ends, and it will, all we'll have are piles of worthless USD we've printed, no manufacturing jobs and not much tangible savings. Oh, and lots of cheaply build McMansions falling apart crammed with toxic Chinese made drywall.

Only THEN will people FINALLY put the Wallstreet bankers heads up on pikes and maybe we'll get to really thinking about how to fix things around here outside of starting a war and trying to take it from some other people (at least I hope we try to fix things - if it's possible) :shrug:



I was thinking again of the class structure in feudal Japan. Emperor, Shogun, Lords, Farmers, Tradesmen, Bankers. Japanese would spit on Bankers. Most Japanese saw bankers as the lowest form of human scum on earth. Lowest of the Low. Hmmmmm.... now I wonder how 500 years ago people living on an Island in an entirely different culture, language, history, even religion, came to the exact same conclusion as me (and apparently the Greeks) :shrug:

 

Dude that Is awsome. We need to start building our industrial Foundation again, or all of us in the western nations are in for a rough second part of the 21st century.

 

Violence in Athens after Greek austerity vote

Maybe they should just suck it up and NOT borrow any more money? I read the other day Greeks will owe MORE at the end of three years than they do now - after tightening their belts. :shrug:

 

Greece was never exactly an economic powerhouse. If it as not for the internet they could change their whole monetary and no one would even notice. Not to offend Greek people but what was their money before joining the EU? Something like the Drachma.

 

I'll say if they're smart (in my opinion) they'll default and get out of the EU

Peace be unto you

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