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drbubb

Greece to leave Euro... Eventually

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(1) I think it is likely that Greece will exit the Eurozone but I do not think it is in the best interests of the Greek people

(2) I think the following article is worth reading - http://www.economist.com/node/21547750

(3) The issue for Greece is that it has no significant natural resources it can export (ignoring tourism for a second) and no strong adjacent economies it can trade with

(4) I also suggest reading Reinhart and Rogoff table 6.6 which mentions that under the author's definition of default (which IIRC includes a 20% deval) Greece has been in default or restructuring 50.6% of the time since 1800 to 2006 (actually I think Greek independence was around 1832 so that may be the start date).

(5) The key question to ask is why it requires a technocratic PM to force through change rather than elected politicians. There is a failure of democracy in Greece - but the failure is not now but over the last 20 years.

(6) Exiting the Eurozone would mean that the cronyism has no pressure to change. The nation will then continue to repeatedly default or devalue for generations.

(7) One has to ask if a Greece which has switched to drachma could stay within the EU as it is likely a switch will require restrictions on the movement of capital and people (hence breaking two of the EU's sacred principles)

(8) In that situation (ie a Greece outside the EU) why would any foreign investor choose to invest in Greece as opposed to Spain, Portugal, Italy or Ireland (if they all remain within the EU)?

(9) One has to remember that before joining the EU Greece was one of the poorest countries in Europe. Why?

(10) I think the expectations for growth in Greece under the austerity measures are probably underestimated. I say this as I believe that the public sector, by over generous salaries etc, has diverted intellect and labour away from the private sector. In addition the deadening hand of bureaucracy and graft has probably excessively suppressed the private sector in Greece. The general assumption seems to be that 1 Euro removed from the public sector is one Euro less to the economy. I disagree - if it means that the private sector retains that Euro then the multiplier is likely to be higher than in the public sector (Maudlin in 'The Endgame' suggests it might be as high as 3x for the US - I think arguably in Greece it might be even higher).

A reduction in the public sector in Greece, accompanied by a reduction in regulation, bureaucracy and both the opportunity for graft and the number of hands seeking the same is likely to speed growth of the private sector. However this will only happen under a strong PM within the EZ.

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(8) In that situation (ie a Greece outside the EU) why would any foreign investor choose to invest in Greece as opposed to Spain, Portugal, Italy or Ireland (if they all remain within the EU)?

(9) One has to remember that before joining the EU Greece was one of the poorest countries in Europe. Why?

 

 

(8) If Greece defaulted they wouldn't be crushed by debt, could devalue, tourism would recover. An investor's currency would be worth a lot more drachmae so they could buy more assets.

(9) They had low wages. In a globalised world that gets jobs and investment doesn't it?

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(6) Exiting the Eurozone would mean that the cronyism has no pressure to change. The nation will then continue to repeatedly default or devalue for generations.

Yes, but why not if they wish to do so? It's a little like bringing freedom and liberty to Iraq or Afghanistan, isn't it? Horse and water come to mind...

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(8) If Greece defaulted they wouldn't be crushed by debt, could devalue, tourism would recover.

 

For tourism you need financially healthy airlines. A subject worthy of its own thread perhaps?

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Hans-Werner Sinn, a more prominent German economist, sees Greece as not being able to stay in the Eurozone anyway and asks why the bailout money is not used to smooth over Greece leaving the Eurozone.

 

http://www.spiegel.de/wirtschaft/soziales/0,1518,816291,00.html

 

Meanwhile, German finance minister Schaeuble ("3% are 3%") wonders why Greece does not take up German offers for helping to improve their tax authorities.

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Some time ago I post an article which warned that Brits may have to be evacuated from Europe.

 

Here's one for evacuations from Greece

http://www.dailymail.co.uk/news/article-2103578/Greek-bailout-Evacuation-warning-Britons-Greece-prepares-sign-rescue-package.html

 

I hope they get their rioting/revolution/civil war/regime change over and done for by October 'cos my cruise ship is scheduled to be stopping over there for a day or 2.

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Some time ago I post an article which warned that Brits may have to be evacuated from Europe.

 

Here's one for evacuations from Greece

http://www.dailymail.co.uk/news/article-2103578/Greek-bailout-Evacuation-warning-Britons-Greece-prepares-sign-rescue-package.html

 

I hope they get their rioting/revolution/civil war/regime change over and done for by October 'cos my cruise ship is scheduled to be stopping over there for a day or 2.

 

 

You should have kept your Gold coins! Itwould have been safer.

 

 

A bloke at my place of work has a wedding planned over there in july. the photos should be great with burnt out building and fighting in the back ground. And thats just her family! :D

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You should have kept your Gold coins! Itwould have been safer.

 

 

A bloke at my place of work has a wedding planned over there in july. the photos should be great with burnt out building and fighting in the back ground. And thats just her family! :D

 

 

If it's not safe, the ship just diverts to another port but there's a Greek guy on another forum who has offered to meet me at one of the scheduled ports to show me around, which is kind of nice if it happens.

 

If the Foreign Office lists Greece as a no-go country, can your man claim the costs incurred on his insurance? He did take out insurance, didn't he?

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but there's a Greek guy on another forum who has offered to meet me at one of the scheduled ports to show me around,

 

Might be an idea to keep your gold on the boat :rolleyes:

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If it's not safe, the ship just diverts to another port but there's a Greek guy on another forum who has offered to meet me at one of the scheduled ports to show me around, which is kind of nice if it happens.

 

If the Foreign Office lists Greece as a no-go country, can your man claim the costs incurred on his insurance? He did take out insurance, didn't he?

 

 

I dont have a clue mate, if he has insurance,

Who knows what will happen over there. It could all fizz out within a few weeks. Or blow up big time! my moneys on the latter.

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Might be an idea to keep your gold on the boat :rolleyes:

 

 

I would take soem of it with me. It might be the only thing that they will accept over there by then.

 

It looks a lovley country. Iv never been but i would love to go one day.

 

Its teh Greek kids taht i feel sorry for. They are the ones taht will be dealing and paying for the fallout of this for years to come.

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W.r.t attracting investors - issue for Greece is why would a foreigner want to invest in Greece?

If the argument is that with drachma the labour is cheap the issue is will Greece be in the EU or not? If not then no can do - plus Bulgaria / Romania / Czech / Poland more attractive re price and near to mkts.

If political instability also a 'no'

And if cheap currency was the only criteria why did it not attract massive car plants etc over the last 200 yrs?

 

Plus generally large corporates don't like investing in a country in the middle of a crisis +/- risk of a coup.

A rapidly devaluing currency also means wage inflation likely to be high - cost of logistics unpredictable and investors don't like economies that tend to strike or have national pay deals.

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Yes, but why not if they wish to do so? It's a little like bringing freedom and liberty to Iraq or Afghanistan, isn't it? Horse and water come to mind...

 

I was arguing that for the private Greek citizen (not the people at the top) in the long run it is better to be in a stable currency etc.

 

Damn - I forgot - the little people always get screwed - I apologise for overlooking that point.

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Qn: Given oil or gas has been discovered in the Med between Cyprus and Israel is there any chance of a game changing find off the coast of Greece that would help GDP in a significant way? Anyone any knowledge of Greece oil / gas prospects?

 

(There is gold - see European Goldfields).

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Hurray, Greece is rescued!!!!!!!

 

Everything will be fine. This bailout is so fantastic, the country will boom soon again! Decades of debt slavery have been avoided (right?).

 

The Goldman-Sucks-Papa must be very happy with himself.

 

Where's the bonus for this bankster?

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[...]

(5) The key question to ask is why it requires a technocratic PM to force through change rather than elected politicians. There is a failure of democracy in Greece - but the failure is not now but over the last 20 years.

[...]

This applies to Italy also and is a very worrying trend!

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This applies to Italy also and is a very worrying trend!

 

When have turkeys voted for Christmas, and the public for less money in their pockets?

 

Sure in wartime Churchill persuaded people to pull together and sacrifice, but we have no leaders of that calibre hence the failure in democracy.

People need role models and if their leaders are all troughing then so will the people.

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When have turkeys voted for Christmas, and the public for less money in their pockets?

 

Sure in wartime Churchill persuaded people to pull together and sacrifice, but we have no leaders of that calibre hence the failure in democracy.

People need role models and if their leaders are all troughing then so will the people.

I totally agree!

 

Democracy (at least in the West) is showing distinct signs of exhaustion and complacency: the last big war and threatening dictatorships are more than sixty years away, and it seems memory is fading fast.

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Under the agreement hammered out in Brussels:

 

* Greece will undertake to reduce its debt from 160% of GDP to 120.5% by 2020

* private holders of Greek debt will take losses of 53.5% on the value of their bonds, with the real loss as much as 70%

* eurozone experts will permanently monitor Greece's economic management

* a constitutional change will give priority to debt repayments over the funding of government services

 

Well I think there is enough time for the Greek people to realise that this means the bankers will be paid even if that means the closure of hospitals and schools. Elections are in April and there isn't a snowball in hells chance the main parties will get back in. I can't see anything other than default happening at that point.

 

BBC News

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... this means the bankers will be paid even if that means the closure of hospitals and schools.

Beautifully arranged by the banksters! They should pay themselves some big fat Greek bonus for that one!

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Oops. News is out that the 2012 deficit will be 6.7% rather than the working figure of 5.4%. All the fancy bailout plans look like a steamy turd already, just 24h after the event. Apparently, it is because the economy is collapsing. Someone has to explain the little Einsteins the difference between a deflationary collapse and a good old hyper-inflationary collapse, it seems. :rolleyes:

 

The bankster should please pay themselves a bonus anyway. Thanks.

 

In German: http://www.spiegel.de/wirtschaft/soziales/0,1518,816784,00.html

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