Greece moves closer to eurozone exit after delaying €300m repayment to IMF

a reply to: AugustusMasonicus
They can call the currency whatever they want, as long as they have their own central bank the they have a whole range of fiscal and momentary policies that will not be available staying in the Euro. Value of the currency internationally will be determined the exact same way every other currency is.
They will still have to address some pretty fundamental problems with their economy but their own currency will allow them to grow/inflate their way out of the debt levels. It is virtually impossible for a modern economy to reduce national debt by cutting spending.

originally posted by: ScepticScot

Value of the currency internationally will be determined the exact same way every other currency is.

Exactly, and what country is going to give Greece and its reneging on its debts a favorable par value on their currency when trading internationally?

They will still have to address some pretty fundamental problems with their economy but their own currency will allow them to grow/inflate their way out of the debt levels. It is virtually impossible for a modern economy to reduce national debt by cutting spending.

Is that so? Who is going to buy their debt and what currency will they be using? Their spending is well over 150% to GDP, how is that even remotely sustainable or possible to 'inflate down'?

This is simple macroeconomics, there is no panacea for Greece, they dug themselves a deep hole and now they are stuck.

Im saying this as a Swede, crash it, the labour that comes out of the crash can be useful for the rest of Europe. Since they will be forced to work.
Crash it

Too me it seems strange when peeps talk about Greece leaving the Euro because I thought they would want to stay in the Euro at the moment in order to keep getting the bailouts from the IMF.
The bailouts keeps them on life support for the time being.
Lets face it we know Greece ain't ever gonna be able to pay that debt back and I don't think they have any intention to either.
What I'd like to know is if Greece defaulted would it even be able to survive on it's own?
Afterall I thought that Greece produced next to nothing nowadays or am I wrong?
I thought that everyone that wants to keep them in the Euro wants to keep them in because greece defaulting would weaken the Euro and maybe even destroy it.

a reply to: AugustusMasonicus
Countries don't give a currency value, markets do. There is no such thing a a fair value for a currency. If the value of the currency is low it will make Greece a more attractive country to invest in (real investment as opposed to speculative). This will overtime increase the value of the new currency. Again the the main cost is going to be a sudden short term dramatic rise in import costs.
Spending is certainly not a 150% of GDP. Their debt is (or actually slightly higher) not their deficit.
Finally their is no such thing as "simple macroeconomics". Just lots of consequences good/bad intended & otherwise.

a reply to: defcon25
The Greek trade deficit is in my view completely unsustainable, however one of the main reasons that being in the Euro makes their exports uneconomic (do you really want to compete against German industry in the same currency).
No country is ever really going to pay back their debt (as in reduce national debt to near zero) however it is paid back (and new debt taken all the time). The mistake is thinking that paying off the debt is important or a good thing.
As long as the economy keeps growing and debt remains a relatively stable proportion of GDP then the nominal debt can continue to grow with no negative consequences.

originally posted by: ScepticScot
Countries don't give a currency value, markets do.

You obviously do not understand how forex is calculated. Many countries peg their currencies to another. Either way, how are the 'markets' going to value the Drachma vis a vis other currencies?

There is no such thing a a fair value for a currency. If the value of the currency is low it will make Greece a more attractive country to invest in (real investment as opposed to speculative).

When you say 'invest' what specifically are you investing in?

Spending is certainly not a 150% of GDP. Their debt is (or actually slightly higher) not their deficit.
Finally their is no such thing as "simple macroeconomics". Just lots of consequences good/bad intended & otherwise.

No, it is not 150%, I was wrong. It is 177%. To pay your debt you need to spend money to do so, either prior to accumulating the debt (which causes you to borrow) or after, when you attempt to pay it back. Stop being obtuse, now you are just playing silly word games.

a reply to: AugustusMasonicus
With the brief exception of the ERM pegged/fixed rates haven't been the norm in decades. Why do you think Greece would go down this route even if it could (which would require massive currency reserves Greece does not have)?
Yes you where wrong, however your main mistake was confusing debt/deficit. Very very different things. If you think the difference is just word games you may need to do a bit more research.

Greece isn't leaving the eu. if Greece leaves, then the cat's out of the bag so to speak. other countries that are in the same economic situation (unsustainable budget deficits and debts) will leave the eu as well, since the precedence has been set by greece. those eu markets couldn't withstand countries leaving the eu, french and german banks would become insolvent damn near overnight, since they are front running those same markets (the same banks that hedgefunds invest billions in *cough* deutsche bank *cough*), which is the only thing creating profits for them.

Not to mention that greek government has no money practically, they had to raid local government coffers and pensions to make the latest payment. they need the bail out money to stay solvent or it's their own heads on a pike. In other words... they need to holdout until that russian gas money starts flowing and they just might.

greece leave and banks, investors lose their shirts? Nah, wars have started over stuff like that. if greece leaves, then sure as a bear craps in the woods, those bagman will want their money (france and germany ). land, confiscation of greek citizen assets globally, to straight up occupation perhaps, they are going to get their money.

TL;DR, a clip from 'i'm gonna git you sucka' (nsfw warning, though the movie is like pg-13)



(france and germany, they're flyguy )

originally posted by: ScepticScot
With the brief exception of the ERM pegged/fixed rates haven't been the norm in decades.

Stop making things up. The Yuan has been consistently pegged to the dollar for years.

Why do you think Greece would go down this route even if it could (which would require massive currency reserves Greece does not have)?

Because politicians have demonstrated over and over again throughout history that they have a rather infantile grasp of economics.

Yes you where wrong, however your main mistake was confusing debt/deficit. Very very different things. If you think the difference is just word games you may need to do a bit more research.

And how does one generate a deficit? Through having a budget surplus?

They spent and spent and spent and then borrowed and borrowed some more. The debt just did not magic into existence.

originally posted by: OccamsRazor04
How much blame lies with Greece for buying what it can't afford and letting this problem fester?

A lot. This issue is seen throughout the spectrum from individuals who buy stuff they can't afford like widescreen televisions and then get upset when the credit card bill comes due to whole nations that want to take care of everyone and everything.

One cannot spend more than one takes in indefinitely and therein lies the fundamental problem.

a reply to: NavyDoc
Actually a sovereign nation with its own currency can spend more than they take in indefinitely (most generally do).

originally posted by: ScepticScot
a reply to: NavyDoc
Actually a sovereign nation with its own currency can spend more than they take in indefinitely (most generally do).

Not sustainably. If they cannot manage their debt, that bubble will burst, such as in the Wiemar Republic or Zimbabwe. One can service a small deficit and/or debt but large deficits that get ever larger every year are not sustainable.

a reply to: AugustusMasonicus
You think Greece is comparable to china? The yuan is significant for being unusual and china has been under pressure for years to intervene less in its currency.
Not going to argue about politicians grasp of economics. The current obsession with austerity in the UK is proof how poor their knowledge is.
As for the debt/deficit of Greece you got it wrong. Either through ignorance of the terminology or just mistyping. Stop trying to defend a position you must know to be wrong.

a reply to: NavyDoc
Yes and no. The absolute level of deficit and resulting nominal debt is not hugely significant. It is deficit relative to economic growth that can be the problem. Both examples you give were the result of an absolute cluster **** of bad economic decisions.

originally posted by: ScepticScot
You think Greece is comparable to china? The yuan is significant for being unusual and china has been under pressure for years to intervene less in its currency.

Who said it was a comparability issue? You claimed no one pegs their currency. I showed you otherwise. There are more examples and plenty of instances where others are linked to a basket of currencies.

Either through ignorance of the terminology or just mistyping. Stop trying to defend a position you must know to be wrong.

How is it wrong? They spent, which lead to a deficit. This in turn equals debt when they try pay it down.

originally posted by: ScepticScot
a reply to: NavyDoc
Yes and no. The absolute level of deficit and resulting nominal debt is not hugely significant. It is deficit relative to economic growth that can be the problem. Both examples you give were the result of an absolute cluster **** of bad economic decisions.

Yes, and spending much more than you take in is one of those bad decisions.

a reply to: AugustusMasonicus
Can you quote where I said no one pegs their currency, is that possibly just something you made up?
You said Greece was spending (present tense) 150% of GDP. That is wrong, but rather than just admit an error you then tried to accuse me of playing word games.

originally posted by: ScepticScot]
Can you quote where I said no one pegs their currency, is that possibly just something you made up?

You said:

With the brief exception of the ERM pegged/fixed rates haven't been the norm in decades.

There are 61 nations which peg their currency, this is nearly 1/3 of the countries in the world.

You said Greece was spending (present tense) 150% of GDP. That is wrong, but rather than just admit an error you then tried to accuse me of playing word games.

I then amended it to the correct 171% and said as much.

a reply to: NavyDoc Depends on what you are spending it on.