Greece Defaults

[scooterscot]

Nobody tells me nuffing. When did this happen?

Honestly you'd never know there was a debt crisis from here in Munich. In fact found a €100 note on the pavement the other day. True.

[AtW]

In fact found a €100 note on the pavement the other day. True.

[Cliphead]

Nobody tells me nuffing. When did this happen?

Honestly you'd never know there was a debt crisis from here in Munich. In fact found a €100 note on the pavement the other day. True.

Not a lucky, they're thowing it away

[Doggy Styles]

Honestly you'd never know there was a debt crisis from here in Munich. In fact found a €100 note on the pavement the other day. True.

It fell out of a wheelbarrow.

[TimberWolf]

Check it for skid marks, you can't be too careful with rich bankers about.

[Old Greg]

This is the simple bit:

1. Greece defaults and defaults big - there's no point defaulting a little bit.
2. Greece introduces the new drachma and starts paying its obligations (public sector wages and any bonds it hasn't defaulted on) in the new currency, but any existing individual or corporate bank deposits in Euros remain in Euros.
3. Greece devalues its currency, restoring competitiveness - an example would be cheaper holidays in Greece.

This is the difficult bit:
1. Bond markets are closed to Greece (but they already are) so Greece must learn to decrease public expenditure (which is largely addressed by devaluing currency) and by collecting taxes (which it may be learning to do via the introduction of a hard-to-dodge property tax collected through electricity bills).


It's time to stop government bail-outs of banks that foolishly leant to Greece at low interest rates.

[MarillionFan]

Stock markets sideaways again today.

Nothing to see here today.

[chef]

The European Economic Advisory Group have released a report (found here) looking at the various potential responses to the Eurozone/Greek crisis

they firstly discuss internal devaluation ( tough austerity measures and squeezes on wages and jobs at home), but from page 118 onwards of the report they discuss Greece leaving the Euro, they note that if Greece did decide to leave the eurozone there would undoubtedly be a bank run, amongst other problems, therefore the ECB would probably need to guarantee all Greek bank deposits.

After demonstrating that Greece would take a big hit should it embark on external devaluation (Greece leaving the eurozone) and head for the exit, they make an important observation: Greek banks might suffer just as much if no devaluation occurs, while private sector companies would be clear winners in the case of an external devaluation

As Greek banks are net borrowers abroad and net lenders at home, the external depreciation will probably hurt them by shrinking the eurovalue of their assets more than shrinking the eurovalue of their liabilities.

However, this analysis forgets the additional write-off losses on claims against the companies of the real economy that will be driven into bankruptcy after an internal depreciation. If these write-off losses are taken into account, it is not clear whether banks fare better after an internal depreciation than after an external one. It is only clear that companies of the real economy will fare better after an external depreciation.

In view of these uncertainties in the analysis, the EEAG has decided not to opt for a particular policy alternative but only to inform policymakers of the relevant arguments. Definitely, there is no alternative that clearly dominates the other in all dimensions.

This isn't a direct call for Greece to leave the eurozone, but it does say that distinguished economists are clearly toying with the idea - though stressing that every scenario involves huge costs.

[DodgyAgent]

So in "easy for an agent to understand" terms, either Greece allows Germany to run its economy or it drops out of the Eurozone. If the former leads to riots then who quells them? German riot police? where have we seen this before?

[Churchill]

So in "easy for an agent to understand" terms, either Greece allows Germany to run its economy or it drops out of the Eurozone. If the former leads to riots then who quells them? German riot police? where have we seen this before?

Erm is the answer "Germany"?