Thread: Question on Greek Financial Crisis

Originally Posted by ace16807

I have a question regarding the greek economic crisis. Normally I'd put it in an existing thread but I don't see one that would be entirely appropriate so I just made a new one. As we all know Greek is suffering from a rather monumental financial crisis of a massive sovereign debt that has been compounding over the last several years due to corruption and tax evasion. Recently, significant civil unrest has erupted in the form of protests opposed to the austerity plans of cutting wages, increasing taxes, cutting down the public sector etc. So here's my question:

What is the alternative? I'm not exactly well versed in these matters, but the only demand that I've seen the protestors set forth is that the corrupt politicians step down. But even after that happens, they still have a massive pile of debt that is in relative terms, overshadows the US's. So how do you start to get rid of this without the aformentioned painful changes (which are really a prerequisite for support from the EU, European Central Bank etc)? From what I know, a significant portion of Greece's population participate(s/d) in tax evasion so they are partially to blame for the problems. I just don't get what the general population at large wants to do about their little issue. They don't want increases in taxes/wage cuts, but surely they don't want to just sit on their heap of debt, pretend it's not there and default on all their loans either?

It's a dire situation, and the next few days are going to be massive not just for Greece, but for the future of Europe and the euro.

It's easy enough to see the problem with the current strategy - the refusal to inflict pain on bondholders, and to attack Greece's people and public services as a first option is savagely resisted because the Greeks see straight through the ideological bias of the ECB. They are being lined up for savage austerity to protect wealthy speculators, same as Ireland and Portugal. Germany wants to burn bondholders, the ECB will not allow it because it doesn't want anything that metaphorically smell like default, no matter how much more inevitable these unrepayable loans make it. Greece's debt is going to hit 175% of GDP next year, the only option (it's not an alternative, as the current policy is long-term not an option at all) is widescale debt forgiveness, Greece will never be able to honour the debts, acceptance of that makes a solution easier. Europe can sit here and give a second bailout, a third next year, a fourth in two years, but the fact remains if Greece has to pay the money back, a default will come down the line. How will it return to bond markets to pay Europe back when rates are in double digits, and it's debt grows higher and higher with every bailout, making the rates even less likely to fall to sustainible levels? Austerity is counter-productive as it sucks growth out of the economy and leads to even higher unemployment, and how can a shrinking economy pay increasing debts without economic collapse?

Greece is also a special case PIG in that in addition to the collapse it has uniquely serious political and societal problems, but the underlying thread is the same - tax-dodging and unsustainible governance notwithstanding, the only way it can recover is with the removal of the unrepayable debt. The Greek people may be having a PR disaster by rioting but that no more makes them responsible for Greece's governing classes screw-ups. We are moving towards some sort of settlement every day, the only question now is can we save the euro? If Greece goes messily it could collapse the entire project - that's the Greeks best card ironically, saw a headline today 'help us or we'll take you all down'. There's some truth to that.

If I were Greek I wouldn't bother, the wealthier nations WILL pay the bill as they did so many times in the past (UK and France).

My grandfather used to say "He is in debts like Greece", and what happened, they loaned more.

Time and again they spend a lot when they can't afford. By your logic is those who lend the money's fault, not those who borrowed and can't pay back. Greece is still major arms buyer but can't safeguard 42km of their border and need EU Forces to do that for her.

I feel sorry for the ordinary worker in Greece, but those who still work still receive 14 salaries/year and go to retirment youngest in EU and with biggest pension as % of the salary.