They still would have to repay what they borrowed from the EU so just how does returning to their own currency help them out?
Will Greece Default on it's debt?
- Thread starter Michael
- Start date
They still would have to repay what they borrowed from the EU so just how does returning to their own currency help them out?
Greece shouldn't "pass the buck" off to other banks because it was Greece who did the borrowing from them. Although those banks weren't altogether not to blame they only supplied what Greece asked for even though they knew that Greece was sinking deeper into debt all the time as they were giving out that money to them. Similar to the home buyers in America who bought into ARM's when they wanted to buy a house.
While Greece is a small country it has been playing the international banking game for decades and should have realized what a dilemma they were putting themselves into. It was because of greedy bankers and corrupt government officials that made their problems worse. Adding more and more people onto the governments payroll wasn't a very smart idea either and Greece knew what that would bring about when the money supply ran dry.
State bankruptcy is not common, because it doesn't really help.
But, as Angela Merkel said, "It is a myth that it does not occur"
The state becomes a pariah, to which no-one will loan money, or do any substantial business.
The economy goes down the tubes.
Eventually, after much woe, countries which have previously had commercial connections with the affected country realise that they are never going to get their money back, and that they are themselves losing money through loss of a trading partner.
They greatly reduce, or wipe out the outstanding debt.
But, as Angela Merkel said, "It is a myth that it does not occur"
The state becomes a pariah, to which no-one will loan money, or do any substantial business.
The economy goes down the tubes.
Eventually, after much woe, countries which have previously had commercial connections with the affected country realise that they are never going to get their money back, and that they are themselves losing money through loss of a trading partner.
They greatly reduce, or wipe out the outstanding debt.
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Let's say you were running a bank.
To make a profit, I mean.
Is that what you would do?
I think that the solution to this horrible mess may come from the Chinese.
They are pouring Billions into Europe at the moment, despite the risks.
That makes sense I think.
A deepening world recession is no use to them.
They are pouring Billions into Europe at the moment, despite the risks.
That makes sense I think.
A deepening world recession is no use to them.
First , being a bank first and foremost, I'd have a very low operating budget and reasonable salaries for everyone including the CEO's and others at the top. Then I'd find buildings to own not lease to operate from. Then I'd make certain loans about 1 to 2 percent above the Feds interest rate in order to secure money from them and pay my overhead and have some profit as well. Those loans would be made to people who qualify with a good job record, stable living conditions and a few other things as well. I'd secure as many loans as possible with something of value like a home or property. I wouldn't play fast and loose with businesses that are trying to start up because that's a very risky way of investing the banks money unless there's a good , sound business record to substantiate that business. Banks aren't meant to be in the profit making business but there to help those in businesses to keep up and running. Historically banks never had high profit ratios until recently when very underhanded CEO's and others started to get greedy and corrupt.
But if other countries see there's a way to reduce the debt , like reduce the government workers and create austarity programs which would increase revenues and lower the debt, they would ask to be done first of all.
Fair point.
Yes, I agree.
Perhaps the Greeks have to go through all this palaver to placate both their own people and the EU.
Eventually they will have to make greater cuts, the pension age being a particular problem, and be given bigger discounts on the outstanding loans.
They need to increase their retirement age to 65 by 2015, not 63. And 67 By 2020.
Yes, I agree.
Perhaps the Greeks have to go through all this palaver to placate both their own people and the EU.
Eventually they will have to make greater cuts, the pension age being a particular problem, and be given bigger discounts on the outstanding loans.
They need to increase their retirement age to 65 by 2015, not 63. And 67 By 2020.
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You sound like you'd run a profitable bank.
You'd never be a Billionaire or cause a World fiscal crisis though
Banking is best run by steady business minded people without a great deal of imagination.
Lend money to businesses or individuals with good prospects and real returns, and spread your risks.
That is true capitalism, which has served us well for a few centuries.
Begging people to borrow money which they have no prospect of repaying.
That's something you need a Cambridge wrangler mathematician to come up with.
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Being a banker at least I would be rubbing shoulders with billionaires and other shakers and movers within the business world. I'd think that anyone who wants to be a banker would want to take a back seat and let those who have the drive to run a business do what they do best and be happy to know they helped them along the way.
The only people who get hurt in a financial crisis in most instances are those people who only wanted to have their money safe and secure, not given away by large paychecks, bonuses and bad investments that the upper management is getting away with.
Big Chiller
Registered Senior Member
Not talking about the ancient Greeks rather modern Greeks but the ancient Greeks are especially admired by Christians and Westerners...
Remember those derivative securities that almost caused the global economic collapse in 2008 – 2009? Well they are alive and well in Europe. Europe, choosing not to follow its American cousin, has not cracked down on derivative trading even in the slightest. So the prospect is thus, not only does the bank that owns the Greek debt take a loss but the banks who issued credit default swaps on the Greek debt takes the loss as well – and so the dominos fall. And of course, like 2008 – 2009, no one knows who is exposed to this risk and to what degree.
Perhaps Greece is looking at Iceland, and considering junk status as preferable to a slow bleeding to death.
Its debt is far larger than Iceland's, at 328 Billion Euro in 2010.
http://en.wikipedia.org/wiki/Economy_of_Greece
The credit rating companies that were too slow in predicting Iceland’s economic collapse in 2008 may be underestimating the strength of its resurrection.
Fitch Ratings said in May it may take two years for the island to shed its junk status, while Moody’s Investors Service and Standard & Poor’s give Iceland their lowest investment grades. That hasn’t deterred investors from trying to buy twice the amount offered in last month’s $1 billion bond sale as the island returned to global capital markets less than three years after its banks defaulted on $85 billion in debt.
http://www.bloomberg.com/news/2011-07-06/debt-raters-miss-iceland-rebound.html
Its debt is far larger than Iceland's, at 328 Billion Euro in 2010.
http://en.wikipedia.org/wiki/Economy_of_Greece
The credit rating companies that were too slow in predicting Iceland’s economic collapse in 2008 may be underestimating the strength of its resurrection.
Fitch Ratings said in May it may take two years for the island to shed its junk status, while Moody’s Investors Service and Standard & Poor’s give Iceland their lowest investment grades. That hasn’t deterred investors from trying to buy twice the amount offered in last month’s $1 billion bond sale as the island returned to global capital markets less than three years after its banks defaulted on $85 billion in debt.
http://www.bloomberg.com/news/2011-07-06/debt-raters-miss-iceland-rebound.html
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Who then would provide the financial support for the Republican/Tea Party?
But the only ones who will end up eating porridge will be the common citizen, not the well to do. Those who steal the money away will just find another country to live in until the financial crisis is resolved. The billions of money they steal from everyone else will line their pockets for many years to come.
charles brough
Registered Senior Member
During the Cold War, Greece had a lot of Marxists and their thinking still dominates a large part of the labor force. These are mostly the "anarchists."
Yes, a default in Greece would tend to result in a collapse in Spain, Portugal, perhaps Italy and others. But what would that mean? My take is that defalt would fail the banking system which means a collapse of credit and hence a vast shrinkege in the money supply. This is deflationary. It means people have less money, buy less, business manufactures less, and tax revenue declines so that the government cannot pay to help the economy---especially since the Repbulican party has convinced everyone that "the stimulus doesn't work."
brough
civilization-overview dot com
Mrs.Lucysnow
Valued Senior Member
No they would not, that's what it means to default. Look at Argentina and Ecuador, neither repaid their debt.
Current rumour is that they may allow Greece to default on its bonds.
Well, that's a first step.
Stocks are very shaky today.
Well, that's a first step.
Stocks are very shaky today.