How and Why would any new Greek government be obligated to pay the old Greek governments DEBT?

In the recent events surrounding the greek debt, something disturbed me.
After the euro summit reached a deal on the 27th october, we saw many pictures of cheering, aimed at instilling confidence in the people and the markets.

But as Papandreou was cheering with euro leaders, his foreign relations minister was cheering in the US with hillary clinton.
And knowing about the recent sale of 300 Abrams tanks to greece, I made some strange connections.
It was like they were saying "yay these suckers bailed us out, we can buy you more tanks now" ...

We vote a new gouvernment every few years. If this would mean, the new gouvernment is not responsible for the debt of the former one, then no modern democracy - or better said "republic" - would pay back anything.

On the other hand Greece is not an isolated self-supporter. If so, they wouldn't have any debt. They are dependant on future cooperation and credits. Not paying the old debts would be like suicide. No war needed to get them under pressure.

The dilemma is, that Europe has to keep Greece alive to avoid an international financial drama. So everybody is throwing in more and more money, but yet nobody in Greece seems to be interested to stuff the hole in the bucket. It just was reported that Greek investors are putting their money into houses in Berlin to have it at a safe place.
That's a reasonable reaction, if you don't want to lose your money. But if the Greek people are not interested in keeping the money in the country, why should others?

I don't think a new gov should have to pay an old ones debt. But it would be hard to avoid with things like trade embargos etc... And with the econ the way it is the rest of the world should be thinking really carefully how they will treat them if they do default etc... as we all could soon be in the same boat.

eta by new gov I mean a whole new system usually comming from a revolt or gov overthrowetc... not we are nolonger blabla we are now blalbabla but the same system etc.

Shouldn't this question be in the Jokes and Puns section?

Originally posted by OmegaLogos
But back to the current debt crisis and the main question IN my OP!...

So should any new Greek government take on the debts of the old Greek government?

If yes or no, then how and why?

I'd like to read you point of view on the question I posed if you have one! Thanks!

I have my doubts as to whether this debt should exist at all. I admit though I'm not really well-polished on how the EU works. Seems to be kind of a "we're all in this together in hte good times, but will beat the hell out of the smallest one in bad times" sort of system.

Despite my examples, Greece is not really comparable to Haiti or South Africa - both those nations were instances of a colonized, oppressed majority reclaiming their country and throwing out illegitimate rulers. Greece... isn't really doing this. As others have pointed out, the US changes government every four to six years.

As I said, I'm not terribly well-polished on the situation, but I am certain of one thing... Greece cannot accept "austerity" and survive. The people of Greece must do everything in their ability to keep their government from accepting austerity measures. Otherwise Greece will with 100% certainty become a pillaged 3rd world nation whose government is wholly owned by foreign corporations.

reply to post by JohnySeagull


ExplanatioN: Uhhm?

Shouldn't this question be in the Jokes and Puns section?

Maybe it should be?

But only if you can provide credible evidence that this thread isn't covering a serious topic and make an alert to the mods explaining why ok!!

Personal Disclosure: Whats so funny about this issue as I'd like to enjoy the laugh and I am not laughing right now!

if the new leadership refused to honor the existing bonds, notes and othe legal financial documents then all credibility and stability would go POOF...

money, laws, contracts, everything would be in chaos

reply to post by OmegaLogos

You're being confused by the anbiguity of the word "government".
The answer to your question is that they are the debts of the Greek state, not the debts of whatever Cabinet is in charge at the time.
The recent changes have not dissolved the Greek state, only put in a different set of Cabinet ministers, so the debt remains.

Originally posted by JohnySeagull
Shouldn't this question be in the Jokes and Puns section?

You would think so - but then again it does illustrate the complete naivety of most of the posters here who simply have no conception of what actually makes the world tick.

...........One problem that should be addressed, he writes, is the $260 billion in sovereign debt owed U.S. and other investors which China has said it simply won't repay. "The repayment obligation was inherited by the People's Republic of China, when the communists took control in 1949. The successor government doctrine of settled international law affirms continuity of obligations among international recognized successive governments," O'Brien said. (Story continues below) Read more: China stiffing America for $100 billion in debt www.wnd.com...

As far as I can tell, things are going to plan.
Isn't the whole idea to get countries into debt in the first place so that the banks then step in and take even more control? This is why we then see "austerity measures" introduced and nationalised, taxpayer owned services sold off to private corporations, backed with finance from those same banks that kept lending and lending to get the country into debt in the first place. It's a robbery merry-go-round and the people are always the losers.

Our own leaders are chosen not by us, but by the financiers. We get to vote for the parties, but not the people who run them and sell us all into perpetual debt to the bankers. This is what globalisation is all about, putting in place a global financial leadership, where we are all debt slaves. Wars are created and financed by the bankers who, through their various branches bankroll both sides. It doesn't matter who wins as both sides end up in massive debt which must be paid to the banks. If they can't stump up the cash, then the banks will take other payment instead. Resources, services, whatever they can get their hands on.

Iceland said no to the bankers and their economy is picking up. Other countries should do the same too and tell the bankers to go whistle. Renationalise industries and put political leaders in place that serve the country, not the bankers. Take back control of currencies from the banks. I mean, what are those guys in the bank boardrooms going to do if everyone said "screw you"?

Sure, things would be messy for a while but the long term benefits outweigh the continued financial raping of nation states by banks, that produce nothing of tangible use to society anyway.

reply to post by Britguy


Excellently put!

Austerity measures are not a method out of debt. They're a method of creating debt slavery. If the Greek people refuse to accept Austerity, then they will suffer a few years of debt. If they accept it, it'll last for generations.

The ESM is the new European dictator. Whenever it wants, and as often as it wants, it can simply request the euro countries to pay billions of euros within 7 days. They can ruin any government within a week!!!



As you can see in the video, it doesn't matter who or which government is at the helm. They are obligated to the ESM.

reply to post by TheWalkingFox


The problem is that whatever the outcome, Greece will undergo austerity - if they accept the deal, austerity is part of the package. If they do not accept the austerity then they will struggle to get cash from the international markets, meaning unemployment and austerity.

Greece shouldn't have wanted to join the Euro and certainly shouldn't have lied about their economy in order to gain entrance. The major Euro powers should have checked Greece's accounts to see if they qualified or not - major fault on both parts there.

However, the Greek governments have not run things properly for generations - if they cannot afford the things they want, why should any other nation pick up the bill for them?

reply to post by Flavian


Mmmmm... I seem to remember that the same big banks handling Greece's affairs and advising them knew exactly what their financial position was.

Here's a little piece with some explanation... oh, and the involvement of Goldman Sachs... well who'd have ever imagined they'd be involved in dodgy financial dealings? I'm also sure they were at the same time placing bets against a future Greek collapse!

Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.

Fictional Exchange Rates

Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

www.spiegel.de...

reply to post by Britguy


Yes but the Eurozone was never actually designed as an economic entity - it was designed as a political entity, not a good idea when forming an economic zone!

Everyone knew Greece wasn't qualified but as it was a political entity, there was no political will to look into the short comings. If this had been designed as an economic entity then all the accounts would have been looked at in depth for every proposed member nation, including the big guns.

The Euro, when you get down to it, really is that simple - a political experiment in creating closer ties gone wrong through lack of will to tackle obvious economic issues

reply to post by Flavian


I think many people get that, except those at the top of the EU hierarchy, who are too arrogant to admit it's a failure and would rather bring down the whole system, no matter the consequences.
The only way for a single currency to work is to have a level playing field across all member states, in both social and economic issues, something which was always going to be statistically and monetarily impossible. I always had the impression they were just admitting new member states to bring those already in, down to the lowest level, rather than bring those with the lowest standards up.

Explanation: Bumped to help generate ad revenue!

Personal Disclosure: Enjoy!

Greece imports more goods and services than it exports. Either they have austerity and cut back consumption or they work harder and become more productive. They have no other option apart from these two.

If they had their own currency they could print it out of thin air and just export their currency instead (hello USA!). This would delay austerity a few years until they had a currency collapse. Currency collapse riots tend to be much much worse than austerity riots. Luckily they are on the Euro and will follow this less painful route.

"Because it imports more than twice the value of its exports, Greece has registered chronic annual deficits in its balance of payments."
www.nationsencyclopedia.com...

The economy is not about dollars or euros, it's the about the goods and services we exchange between each other. Dollars and euros are just how we account for the exchanges and make sure they balance at the end of the day. Greece's day has come. One day the US's day will come but not yet because they are printing today and will have their currency collapse riots later.

"It’s also important to understand that foreigners do not fund the spending of the USA. As a current account deficit nation, the US government can appropriately be thought of as a net currency exporter. This means that we send pieces of paper over to foreign nations in exchange for goods and services."
pragcap.com...