# Greece ... Thank You



## Crandle (25 Jun 2015)

Are we living in an historical moment in Europe  ?

If Greece is cut free (writing this on 25/6/15), is this not the best opportunity for the E.U. and Eurozone to reassess everything. Combine this with the U.K.'s renegotiation of their relationship with the E.U.?


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## Setanta12 (25 Jun 2015)

I note that if the UK leaves they will join Norway & Switzerland as contributors to the EUs budget ... ... ...


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## jpd (26 Jun 2015)

Good historical perspective in IT today.

IMHO, it's time the Greeks stopped blaming everybody else and look for solutions closer to home.


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## Gerry Canning (26 Jun 2015)

jpd said:


> Good historical perspective in IT today.
> 
> IMHO, it's time the Greeks stopped blaming everybody else and look for solutions closer to home.


From all the chat in the media ,
1.  It is easy to blame Greeks for their mess.
2.  It is easy to blame Eu for letting them into Euro, knowing their figures were iffy..

I can,t help but feel there is but one solution ,( unpalatable as it sounds.)
1.Write off or re-re- stretch at .0005% interest on what they owe.
2. Allow enough ongoing budget leeway that the Greek people are not starved.
Maybe behind the bluster that is what is proposed. 

It is said Greece owes billion 300 !
Now if you were a builders provider and someone owed you e300.
If they were a hopeless case would you not gladly take e80? 

So in pragmatism, lets face the music and make the decision.


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## Firefly (26 Jun 2015)

Gerry Canning said:


> Now if you were a builders provider and someone owed you e300.
> If they were a hopeless case would you not gladly take e80?
> 
> So in pragmatism, lets face the music and make the decision.



True, except it would quickly turn into a moral hazard situation with other countries deep in debt "Where's my NAMA" comes to mind. If Greece wasn't geographically located where was (with Putin making moves in Eastern Europe) they would have been let go well before now. Having said that, Greece is like the gangrenous leg of Europe and should be cut off. The could do with a weak currency that would boost their tourism.


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## Firefly (26 Jun 2015)

If Greece does default, I would expect more interest in our numbers by those who value bonds and our interest rates to start to push up. We're in fine company as you can see. Still, as someone here once said about government borrowings, "sure that's what governments do" it shouldn't matter at all should it? (I notice how the Keynesians have gone all quiet about government borrowings of late too!).


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## johnwilliams (26 Jun 2015)

if Greece leaves how does that effect the euro v us dollar/sterling (imports e.g. petrol/foodstuffs ?


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## Brendan Burgess (27 Jun 2015)

The Greek debt is unsustainable and the reality is that it will not be able to recover without some write off.  Some write off now would be good for the European economy generally.

However, there is no point in writing off debt until they are prepared to face up to reality themselves. I don't want to see debt write off so that they can retire at 62 with some retiring at 50.   Or debt-write off so that they don't need to bother enforcing tax collection. 

And of course, if they do write down debt, then other countries will want their debt written down.  Just as when someone in distress gets a split mortgage and someone paying their mortgage in full gets no deal. 

Brendan


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## Duke of Marmalade (27 Jun 2015)

In this piece Karl Whelan argues that the linking of Grexit with Greek default on its official creditors was a spurious linkage drummed up by the ECB at the behest of the Germans.  His argument goes that since the banking system's assets are quite unaffected by such a default the ECB should have no difficulty in continuing to support Greek banks within the euro.

So Karl's scenario is that the Greeks should be allowed to say "stuff your official loans" and that should have no impact whatsoever for Greek citizens and their euro deposits.  If a professor of economics believes this then perhaps I should stop slating the likes of Sinn Fein for espousing similar economic wisdom.

Here's the reality check.  If Greece thumbs it's nose at its official creditors, there will be all hell to pay - otherwise all order in international financial relationships will be doomed.

Although the professor's logic would not require it, this would be the chain of events:

- ECB withdraws ELA
- Greek banks have no euros to give withdrawing depositors
- Greece has to leave the euro and introduce a new drachma
- Economic sanctions are applied if Greece continues to default on its international obligations
- If the Greek central bank defaults on the terms of ELA there is a possible freezing of the deposits of Greek residents in other euro area banking systems; after all it is ELA commitments from the Greek central bank which are backing these


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## Brendan Burgess (27 Jun 2015)

Duke of Marmalade said:


> - Economic sanctions are applied if Greece continues to default on its international obligations



Are you sure about this?  What sort of sanctions?  We are not allowed to go on holidays to Greece?  A duty is put on their exports? 

I doubt it, but I don't know.

Brendan


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## Duke of Marmalade (27 Jun 2015)

Brendan Burgess said:


> Are you sure about this?  What sort of sanctions?  We are not allowed to go on holidays to Greece?  A duty is put on their exports?
> 
> I doubt it, but I don't know.
> 
> Brendan


_Boss_ I don't know.  But there must be surely some ramifications other than we won't lend you again. Beside the official loans the ELA issue is huge.  All those deposits which have flown from Greece backed by a promise from the Greek Central Bank to back them (ELA).  If the Greek Central Bank simply welched on those obligations that must be subject to some sanction.


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## Jim2007 (27 Jun 2015)

Brendan Burgess said:


> Are you sure about this?  What sort of sanctions?  We are not allowed to go on holidays to Greece?  A duty is put on their exports?



There will be a need to bring in capital sanctions to ensure that Greek banks and asset managers do not move capital back to Greece from their European branches and subsidiaries (remember the T1 ratios).  But beyond that I doubt you will see much by way of sanctions on the EU side.

On the Greek side it is another matter, they have been had a negative balance of payments going back to the 90s and so they will have a desperate need for hard currency so we'll have to see how that pans out.  As for holidays, I expect you'll have to do it all in cash and like travelling in places like Hungary in 1980s, pay for everything twice - once in the official currency for the government and once in hard currency on the black market....


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## Duke of Marmalade (28 Jun 2015)

So the ECB is not yet withdrawing *existing* ELA.  But no new stuff, so I suppose the banks will have to be closed until the referendum.

The outcome of that is very hard to call.  70% support Syriza's hard line and Syriza have asked for a rejection of the terms.  But a similar percentage want to stay in the euro and they know rejection of the terms is possibly disaster, a huge risk.

I can see the Greek people accepting the terms out of sheer pragmatism.  A bit like Scotland rejecting independence, a vote from the head but not from the heart.  I foresee a similar reaction as in Scotland with, paradoxically, a wave of increased support for Syriza even though they lose the referendum.

_Betfair _are betting 6 to 4 against a Grexit.  This is way down from the 8/1 a few days ago but it still says that on balance the punters think there will *not* be a Grexit.


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## Firefly (29 Jun 2015)

Anyone else notice how quiet the Austerity Alliance / People Before Profit and the other Looney Left brigades have been of late? I would have thought that they would be out marching in the streets supporting their comrades in Greece? Seems like no one is shouting "Burn the Bondholders" now ??


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## Brendan Burgess (1 Jul 2015)

Firefly said:


> Anyone else notice how quiet the Austerity Alliance



Hi Firefly. That is a great name for a new party.  The Austerity Alliance. That is what we need in this country. Not the Anti Austerity Alliance. 

I heard Paul Murphy on the radio this morning saying "The Greek people are right not to pay the debt, which is not their debt". 

Whose debt is it?  Unfortunately it was a closing comment so he wasn't asked to explain. 

Brendan


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## Firefly (1 Jul 2015)

Brendan Burgess said:


> Hi Firefly. That is a great name for a new party.  The Austerity Alliance. That is what we need in this country. Not the Anti Austerity Alliance.



lol


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## Firefly (1 Jul 2015)

Your cash is always good with Ryanair it seems!

http://www.irishtimes.com/business/...h-payments-from-customers-in-greece-1.2269330 

However.....

"...many Greeks have found they can no longer make payments online"

"Amazon, Google, Apple and Facebook declined to comment. Other big online providers including Microsoft, Adobe and Expedia did not respond to a request for comment."

_I wonder will we start to see more acceptance of Bitcoin?_


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## Brendan Burgess (1 Jul 2015)

If you want to help Greece there is a crowd funding exercize to help them raise the €1.6 billion. 

https://www.indiegogo.com/projects/greek-bailout-fund#/story

55,000 people have donated  €1m in a little over 24 hours, so only €1,599,000,000 to go. 

Brendan


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## Firefly (1 Jul 2015)

reuters...

"Prime Minister Alexis Tsipras has told international creditors Athens could accept their bailout offer if some conditions were changed"

I thought the people of Greece were being insulted by all this austerity and demands of the creditors? Tsipras has urged a No vote only yesterday and now has about-turned - hard to see how he and Evel Knievel will survive after calling the referendum!

How can anyone take the Greeks seriously any more, never mind trust them? They've made a huge mistake IMO and lost all credibility and any influence they ever had in the EU.


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## Brendan Burgess (1 Jul 2015)

Firefly said:


> Tsipras has urged a No vote only yesterday and now has about-turned



I think he has turned around again even since then and denied that he was making any concessions. 

He is claiming that voting no doesn't mean that they have to leave the euro. 

He is doing the Greek people a huge disservice.  But they probably don't appreciate that. 



Brendan


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## Firefly (2 Jul 2015)

Guardian...

"Yanis Varoufakis says he'll resign if Greece votes Yes - live updates"

Aww...I think I would miss him actually. It just wouldn't be the same without Evel Knievel!


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## johnwilliams (3 Jul 2015)

heard that they destroyed their drachma printing presses couple of years ago ,so what will they do then, how quick could they have a new currency up and running ,would they keep printing and using greek euro notes


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## Duke of Marmalade (5 Jul 2015)

Greek polls just closed.  _Betfair_ go 6/1 against a Yes - which is a dramatic change from this morning.  So folks, looks like it will be NO.  How does _Betfair_ know these things?


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## Brendan Burgess (5 Jul 2015)

Exit poll?


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## Duke of Marmalade (5 Jul 2015)

I see Fierce Doherty and Paul Murphy are at Syriza HQ to celebrate.  Hope they forgot to bring enough euro to get them home


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## Sophrosyne (5 Jul 2015)

According to the Guardian - live updates - the No voters are already celebrating. 

Official projection: No side to win by 61%.

The Guardian is also predicting dramatic moves in tomorrow's financial markets as investors did not expect such a decisive win by the no side.


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## noproblem (5 Jul 2015)

If this is true it's great for democracy. The democratically elected Goverment of Greece were forced to put the referendum to its people because the powers that be in the EU wouldn't deal with them, but have said behind the scenes they'll deal with a new Goverment. Greece will get a deal, huge debt will be written off, it was always going to happen, always, because it wouldn't have been paid. It was a no brainer, but so called economists at the highest level wanted it done their way. Now they've got their answer. Kenny had a cheek saying Ireland wouldn't back Greece, he had no mandate for his hugely stupid intervention. The headless chickens are in contact now, couldn't see beyond their own assessments of the situation and didn't read the signs. Silly, stupid, dictatorial fools.
 The Greek people should stand up proudly tonight, they have been brutally treated, but not beaten. The jackboot has been seen for what it is. Now, if there are good brave people who are able to see the light for a new, proper Europe, now's the time for it to happen. No rocket science needed in order to see what needs to be done. Someone's got to get hurt, their pockets picked big time. It's called debt forgiveness, or write off, or tear it up, or forget about it, whatever? Then it starts. Now, get it on.


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## Brendan Burgess (5 Jul 2015)

Hi noproblem

No one really knows what will happen. 

They might well be standing proudly outside their closed banks and silent factories and empty tourist resorts, starving. 

I would not like to be one of those pensioners who retired at 50 depending on the state to continue paying my pension or one of the large numbers of unemployed depending on state handouts. 

Greece lived beyond its means for years on borrowed money.  It was a mistake of the international lenders to give them that money. It would be  a bigger mistake to give them any more now.  Unfortunately the people have been fooled. They will learn the hard way that they can't insist that international lenders will continue to finance them living beyond their means. 

The only long term solution for Greece is to live within its means. When it shows a commitment to doing that, then there will have to be debt write off. But there can't be debt write off just so that they can continue to live beyond their means.

Brendan


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## galway_blow_in (5 Jul 2015)

Brendan Burgess said:


> Hi noproblem
> 
> No one really knows what will happen.
> 
> ...




the story is much bigger than Greece and that countrys chronic tax avoidance culture , Greece is a link in the chain of the second most important economic zone in the world , this makes it impact  much more important than the size of its economy would other wise suggest , I can see Washington being on the phone all night to merkel , telling her to plug the dam which is holding back leahmans mark 2

the greeks are in a much stronger position than yesterday , there is already a feeling amongst the European population that a severe democratic deficit exists amongst the so called elite institutions , if Greece is thrown to the wolves , European populations will become much more active politically , this evenings results is huge


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## noproblem (5 Jul 2015)

I understand exactly what you're saying Brendan, but I also know that taking a few more bob from pensioners and ordinary working people was never going to solve anything apart from saving the ego's of the dictatorial ECB and their EU employers.The mistake with Greece was allowing them into the EU, they were welcomed to open arms although the powers that be and the dogs on the street knew the books were cooked, but by whom were they cooked? I know of no country in the civilised world that lives within its means, none. They live within the means of some invisible economists pumping out numbers, changing projections as fast as a 3 card trick pony, planning and plotting with bankers and industry heads in order to keep a certain regime in place. Goverments are then put in place to supposedly run these regimes for authenticity, it looks good, but is so false and now the Greeks have called their bluff. Lets see will the starvation and huge unemployment and poverty you talk about take hold now? I'd imagine Greece has more friends than European enemies. Politics and democracy have been put to shame recently by some elected and some not elected human beings. They and others have a chance of writing a new chapter, but are they capable of doing so? If they're not, it won't be money we'll all be worrying about and that's for sure. You can refuse talking to a Goverment even though it's democratically elected, but try not talking or refusing to talk to a country's citizens? That's what you call a problem and if gets to that, God or Allah, or whoever, help us all.


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## milamber (5 Jul 2015)

Crandle said:


> Are we living in an historical moment in Europe  ?
> 
> If Greece is cut free (writing this on 25/6/15), is this not the best opportunity for the E.U. and Eurozone to reassess everything. Combine this with the U.K.'s renegotiation of their relationship with the E.U.?


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## milamber (5 Jul 2015)

If Greece leaves the Euro then eventually all members will leave because the markets will round on the bond yields of the southern countries and Ireland. The markets will believe the euro is reversible. The problems with the euro would need to be fixed to avoid breakup and I don't think there is the political will or public support for common tax, common fiscal authority and mutualised debt.


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## Brendan Burgess (5 Jul 2015)

galway_blow_in said:


> if Greece is thrown to the wolves ,



The Greeks are throwing themselves to the wolves.  They have been living so far beyond their means and have not taken tax collection seriously. 

That is not the EU's fault, although it is the EU's fault that they were let into the Eurozone in the first place.

Brendan


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## Sophrosyne (5 Jul 2015)

Quote from the Guardian - live update

Caroline Lucas MP, who represents the British south coast constituency of Brighton Pavilion, says the eurozone must now accept that Greece needs debt relief:

_“The Greek people have made a decision which must now be respected. This referendum has seen EU states do their very best to undermine the democratic will of the Greek people but it’s time to draw a line under the past and move onwards._

_“History shows us that countries can escape crippling debt in a just way.

In 1953, at London Conference, Greece was among the European nations signing a deal which allowed for the cancellation of German debt, to enable the country to grow again after the destruction of the Second World War.

Europe needs to come together to offer the Greeks a deal which allows their country to be rebuilt.”_


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## rockofages (5 Jul 2015)

I think the Germans had the fundamentals right by 1953. Their economy was growing rapidly and they only had to repay their debts as long as they were running a trade surplus. The Greeks have none of that. Some commentator said recently that "they're collecting virtually no taxes to pay for a public sector that does virtually nothing" or similar.


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## Sophrosyne (6 Jul 2015)

rockofages said:


> I think the Germans had the fundamentals right by 1953.
> 
> Their economy was growing rapidly and *they only had to repay their debts as long as they were running a trade surplus.*



What if there was no trade surplus?


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## Sophrosyne (6 Jul 2015)

rockofages said:


> Some commentator said recently that "they're collecting virtually no taxes to pay for a public sector that does virtually nothing" or similar.



"Some commentator" ???


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## rockofages (6 Jul 2015)

Sorry, dunno, someone on radio in the background, I wasn't really paying attention.

As regards a German trade surplus. This is Germany we're talking about. Like death and taxes, a German trade surplus is inevitable.


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## Sophrosyne (6 Jul 2015)

rockofages said:


> As regards a German trade surplus. This is Germany we're talking about. Like death and taxes, a German trade surplus is inevitable.



What if in 1953, the Allies had taken the same view about debt repayment as the current German Chancellor?


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## Brendan Burgess (6 Jul 2015)

rockofages said:


> "they're collecting virtually no taxes to pay for a public sector that does virtually nothing"



That's a great line.


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## so-crates (6 Jul 2015)

It is interesting that only 62% of the population voted. Given the current state of Greece you would think the turnout would have been higher. Even if it was for a referendum which was going nowhere irrespective of the outcome. Talk of debt forgiveness is premature. Greece have gone backwards from last October when they were forecasting for 2015 a 2.9% increase in GDP, a further reduction of unemployment and the debt/GDP ratio dropping to 160%. The current Greek government appears to be determined to run the country into the ground and are doing so while demanding acclaim for "standing up" to the creditors. As to who will have to swallow any debt forgiveness, their nearest neighbours will be worst affected (Malta, Spain, Italy et al) but they themselves will bankrupt their own banks. There is a sizeable lump of cash that the Greek government owes Greek banks and those banks will not be able to absorb any haircut on that.


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## Firefly (6 Jul 2015)

I think calling a referendum was incredibly unfair as it lobbed the decision on the general public who are totally confused at this stage...they were voting on a deal that had expired for God's sake! The public don't know all the facts, nor are they privy to the dealings & mood of the creditors. It was a lame and weak get-out by Tsipras. 

I am expecting Irish bond rates to start increasing by the end of the week. As an aside, there might be a small positive in this for us - as we are still borrowing ourselves, it will be more expensive for FG/Labour to implement tax cuts / increased spending in the near future if the cost of borrowing to do so increases.


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## so-crates (6 Jul 2015)

I agree - it was totally unfair. An abdication of the responsibility he courted by running for election. He pretty well knew he couldn't get it past parliament and I think that was why he called the referendum. It would suit him either way. When it emerged that the offer was no longer valid then he called for a no vote.


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## Gerry Canning (6 Jul 2015)

Does anyone know how austere the present hits are on the Greek people?
Does anyone know what is the old age pension rate?
Does anyone know how hard the proposed measures would have impacted on the citizens?

I find it strange that thinking people in Greece would have voted NO unless they felt that quick Armageddon was preferable to death by Troika?

I tire of hearing that Greece must this or Europe must that , without being able to get a handle on were the kbeing


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## Brendan Burgess (6 Jul 2015)

It seems to me to have been extremely risky. 

Most of the time it will result in the Greeks exiting the euro and the banks staying closed. 

The creditors may cave in and give him everything he wants in which case it will turn out to have worked well. 

Or they may not agree to his proposals in which case the banks will remain closed until they convert everything to Drachmas.  It will be extremely difficult for him to agree to anything now. 

Brendan


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## Brendan Burgess (6 Jul 2015)

I think that there is a bigger risk. When the Greek people realise that they are back to the Drachma and receiving pensions in a greatly devalued currency, there could be widespread rioting and probably an actual revolt. Not sure what the Greek army is like these days, but they might have to restore order.  This is not a forecast, but it's the type of risk that they are facing.


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## Firefly (6 Jul 2015)

Not chance the lady would get the helmet either....such a gentleman indeed!


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## Protocol (7 Jul 2015)

Gerry Canning said:


> Does anyone know what is the old age pension rate?



In most EU countries there is no fixed, flat-rated pension, as pensions are linked to previous wages.

Ireland is unique, or one of very few countries, that has a flat-rated pension of 230.30 per week.


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## Duke of Marmalade (7 Jul 2015)

"Austerity".  What does it mean?  Technically it means "fiscal consolidation" but it also gets intermingled in the public mind with its more colloquial meaning of "hardship".  Sinn Fein are masters of this ambiguity - they trumpet on about the evils of austerity,  playing up the latter meaning but they are also not at all shy in spouting pseudo Keynesian style economic arguments against the technical meaning.

Paul Krugman, Nobel laureate, is the leading intellectual cheerleader for the international anti austerity movement.  Paul is now advocating a Grexit and massive devaluation.  So at least we know that Paul has no qualms about hardship - if his recipe is followed Greek pensioners will suffer a misery on a different scale from the so called austerity of the bail out offer.


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## ashambles (7 Jul 2015)

Prior to all these economic crises I'd generally understood that the opposite of austerity is extravagance, if so I assume that's why the propagandists prefer to use the term "anti-austerity" instead.


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## galway_blow_in (7 Jul 2015)

Protocol said:


> In most EU countries there is no fixed, flat-rated pension, as pensions are linked to previous wages.
> 
> Ireland is unique, or one of very few countries, that has a flat-rated pension of 230.30 per week.



even you never paid a red cent in income tax during your life , you receive a state pension of 219 per week


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## Brendan Burgess (7 Jul 2015)

It's a good idea to challenge the abuse of this word. 

If someone or some country can afford to live an extravagant lifestyle, that is fine. 

But, as a country, we have been living an extravagant lifestyle by paying  high social welfare rates and high public service salaries.  We borrowed money instead of raising taxes to do this.  

Is the opposite austerity? Not sure. There must be a better word for  living within one's means.


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## Duke of Marmalade (7 Jul 2015)

_Boss_ when I was a boy the term was "fiscal rectitude", remember Mac (Sharry) the Knife?  I don't like the term myself as it sounds like a pane where I don't have a window.

But "Prudence" or "Responsible" seem much better terms.  Can you imagine the Anti Prudence Alliance or the Irresponsible Alliance


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## Brendan Burgess (7 Jul 2015)

Or simply the Extravagance Alliance?


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## Gerry Canning (8 Jul 2015)

Anti-Austerity presupposes Citizens can afford a certain life -style.
If it is a case a State cannot raise enough money/taxes  , things like pensions will by necessity be cut to a minimum.

Most of the Anti-Austerity type people ,from what I can see, have genuine concerns over the financial divisions in Society.
It is very easy to deride their (cures)(wacky proposals) but remember ,and I say this with respect , most anti-austerity type voters are not versed in the minutiae of finance and are not what we call (educated).
But I do agree with them on the way elites have manipulated things.
The Anti,s clearly understand that if something walks like a duck ,quacks like a duck ,you do not need to take DNA from a feather to prove its a duck! The Elite turns their noses at the naievety of (these people) and take pot shots at them but do not address Anti,s overall conclusions.
It is instructive, that it is our Anti,s/non -aligned TD,s that lead in raising most concerns, it is very worrying that Government ,who know where things are, seem surprised when things are revealed.  
So Anti,s clearly understand that this overall horse-trading is geared to protect Elites ,not citizens.
They clearly see that unless reforms are initiated to benefit everyone ,society will crack.

Greece would appear to have been run for an elite by an elite whilst they,the elite milked European funds,until they got caught out.Mr Average Greek now carries the can.
From what I can see the State Pension in Greece is e100 per week.

Italy has non performing , non provided for ,Bad loans @ 16% of Banks books ,@ 16% are Italys Banks not banjaxed?
I do not see how Italys Banks can survive.

I would suggest that the real blow up has yet to happen?


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## Brendan Burgess (8 Jul 2015)

Hi Gerry 

I am not sure that austerity protects the elite and not the citizens. 

We have a very high national debt. We have an ageing population. We have a very low tax base. There is still a significant risk that Ireland as a nation might go bust.  If that happens, there will be savage cuts in pensions and social welfare and health services. 

The elite probably won't be hurt too hard if there are such savage cuts. Those dependent on social welfare will suffer the hardest. 

Brendan


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## Firefly (9 Jul 2015)

Reuters ....  It promised to begin implementing tax and pension measures sought by creditors as early as Monday.

I don't think anyone believes them (Greece) anymore - the boy who cried wolf etc. Anyone else think (apart from the obvious, immediate pain) that Greece would be better of with a weak drachma in the longer term?


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## Brendan Burgess (9 Jul 2015)

I think we might all be better off if Greece were encouraged out of the Euro. 

We would probably have to write off €300 billion of debt, but we are probably not going to get it back anyway. So it's just a question of recognising it.  There is no point in lending Greece €4 billion so that they pay back €4 billion. 

A new currency would force austerity on them. They would have no choice but to do what is necessary. (We would never have been able to politically choose austerity in this country had the Troika not been here to enforce it.)  It would be painful but it probably would make them more competitive in the longer term. 

And we should not have all the Prime Ministers and Finance Ministers and Central Bank governors spending such a huge proportion of their time on Greece.


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## Firefly (9 Jul 2015)

Very interesting 3-part article by Der Spiegel below. When I opened each in Chrome it tries to print the arcticle, but just hit Cancel and it is displayed in an easy-to-read layout.

It looks like both Left & Right governments in Greece were both cooking the books over the years. The outcome does not look particularly rosy for Ireland either I must say....have our bond rates started moving north yet??

[broken link removed]
[broken link removed]
[broken link removed]


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## Firefly (9 Jul 2015)

Brendan Burgess said:


> I think we might all be better off if Greece were encouraged out of the Euro.
> 
> We would probably have to write off €300 billion of debt, but we are probably not going to get it back anyway. So it's just a question of recognising it.  There is no point in lending Greece €4 billion so that they pay back €4 billion.
> 
> ...




I agree. Better the cut them lose and take the hit. It would focus the minds of governments in Spain, Portugal, Italy and here to sort out their finances or they would be next. The fear I have is that our bond rates will shoot up if Greece leaves the euro (the fact that a country can leave or be forced out of the euro would make it riskier). This would increase the cost of our existing debt to the point where we could quite easily be borrowing from Peter to pay Paul as per the Greeks. If Greece leaves the euro....all eyes would turn to us, Spain & Portugal fairly rapidly. I think a few pounds in Sterling under the mattress might be an idea!


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## 44brendan (9 Jul 2015)

There is obviously a strong prospect of a Grexit unless Greece gets its act in order and implements reform that will lead towards a more balanced budgetary system. However, there is no natural co-relation between the position adopted by Greece and countries such as Ireland, Spain & Portugal (France would be also on the periphery of this mix!). There have been significant concentrated efforts to do a deal with Greece which would keep them in the Eurozone. A debt W/O is not on a table as the assumption is that if Greece gets one the rest of us will be clamoring for similar treatment!
I would not see a Grexit as being the first Domino of many but more of a recognition of failure by the Eurozone in completing a proper due diligence on Greece when it was initially accepted. All external forecasters indicated that Greek figures were manipulated to get them into Eurozone and that they would struggle to meet the parameters of staying there. Perhaps the best solution for both Greece and the rest of the Eurozone countries is for a period of exit incorporating sufficient support provided that they work towards an acceptable budgetary balance over an agreed period. I.e. Yellow card rather than red!


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## Sophrosyne (9 Jul 2015)

Firefly said:


> I agree. Better the cut them lose and take the hit.



Be careful what you wish for.



milamber said:


> If Greece leaves the Euro then eventually all members will leave because the markets will round on the bond yields of the southern countries and Ireland. The markets will believe the euro is reversible. The problems with the euro would need to be fixed to avoid breakup and I don't think there is the political will or public support for common tax, common fiscal authority and mutualised debt.



Agreed.

The mistake was allowing Greek entry in the first place.

Now, the situation has become extremely complex.

If Greece _does _exit it won't be a question of the Eurozone simply returning to where it was before the Greek entry.

I am sure this will not be lost on the IMF or ECB


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## Gerry Canning (9 Jul 2015)

Brendan,
1. Agreed we have high debt.
2. Agreed we have a narrow tax base.
3. Ageing population , not so sure (at least compared to EU neighbours)

I think we all have (Greek) views formed by a lack of hard info.
There is a general acceptance that Greeces elite took EU for a ride !
There is consensus that the Greek people will never ever ever pay back Billion 300.
There is a feeling that more sour  medicine will sort Greece. Not sure it will, I heard civil servants have had a 50% wage cut so far, common sense says 50% is as much as can be borne?
There is a feeling that a Political fudge will re-stall matters eg re-re-re-stretch term etc, as Fine Gael seems proud of in having done for us?.

I worry that re -re -re stretching known (default) countries Ireland, Spain , Portugal , just masks the problems in Italy ,maybe France etc. 
I fear there-be a bigger storm acoming !!


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## Firefly (9 Jul 2015)

Firefly said:


> Very interesting 3-part article by Der Spiegel below. When I opened each in Chrome it tries to print the arcticle, but just hit Cancel and it is displayed in an easy-to-read layout.
> 
> It looks like both Left & Right governments in Greece were both cooking the books over the years. The outcome does not look particularly rosy for Ireland either I must say....have our bond rates started moving north yet??
> 
> ...



Selected quotes from the above articles (which are IMO a fantastic walk-through of the euro to the present day problems):

_The Greeks were able to borrow at interest rates that were only slightly higher than those that the German government paid on its bonds. "The euro was a paradise of sorts," *says then-Greek Finance Minister Yiannos Papantoniou*_

_With a steady flow of easy money coming from the northern European countries, the Greek public sector began borrowing as if there were no tomorrow._

_Of Greece's working population of 4.4 million, roughly 1.5 million people work for the government - _
That's 1 in every 3 ! Surely it's impossible to fund the public sector along with social welfare and pensions, never mind any capital projects and historical debt obligation when 1 in every 3 workers works for the government?

_With tax revenues of less than 30 percent of economic output, Greece has the second-lowest tax rate of all euro-zone countries. The Foundation for Economic and Industrial Research (IOBE) in Athens estimates annual black-market sales at €59 billion -- a quarter of the official economy._

Although Germany and France are not guiltless for lending to Greece, Greece must obviously get its house in order pronto - there's only so far the can be kicked down the road.


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## Firefly (9 Jul 2015)

Sophrosyne said:


> Be careful what you wish for.


The fact we have lent so little to Greece means we are not on the hook in the same way as other countries are.  No doubt we would feel some pain though...I've mentioned our cost of finance could rise following a GREXIT. It would be probably better for Ireland if Greece stayed as it would keep the focus off us. But for the Greeks and the longterm stability of the euro, I think the Greeks should leave..


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## The_Banker (13 Jul 2015)

Does this mornigs deal save the Euro or is it just another case of "extend and pretend"? 

Will it get through the Greek Parliment? Under the terms it needs to be accepted by Wednesday or Thursday I believe. Legislation passed under duress/time pressure is never a good idea.
Syriza may split because of this deal.


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## 44brendan (13 Jul 2015)

This was never a single issue of "saving the Euro"! While a Grexit would have been un-palliative to the Eurozone it would not necessarily precipitate a break-up or a 2 tier Euro. All of the remaining "PIG" type countries have co-operated in reaching austerity type agreements and all are complying with these agreements to date. Iceland was in a better position than Greece to default because it was outside the Eurozone. Most of its problems were historical and they reverted to a balanced budgetary position without the need of extensive external funds. German/Finland proposal for a 5 year exit was the alternative option open to Greece and that appears to be a worse option for them than the very severe package now proposed.
All current indications are that it will be supported in parliament by the opposition who are more right wing than Syrzia. Yes a Syrzia split is likely and either way it would appear that their time has come and gone.
Very harsh decisions had to be made by Greece whatever agreement was reached. Anti -austerity approach is fine where a realistic alternative is put forward. However the funds have now dried up and Greece is now both insolvent and Illiquid. Banks are closed and the economy is descending into a cash only society. This is not sustainable for any economy and even the Left wing Syrzia realize that they are in a frying-pan/fire scenario.
Unfortunately when the previous proposal was put to the Greek people the downside risk of a No vote was never adequately explained to them. Similarly when the troika entered Ireland had a Left wing Government put a choice to the people of austerity or no-austerity I'm sure it would also have been declined. Populism and realism are not frequent bedfellows. If so Joe Higgins and his party would be our next Government.
While Government Economies are not quite similar to those of a family there are broad similarities. The main one being that if you continually spend more than you earn you will eventually run out of cash and credit. What would the borrowing costs to Greece be if the exited the Euro? Also who would lend to them without a budget program that would facilitate a return to a balanced budget scenario. Russia are not going to finance a soft bail-out and even Syrzia recognize that their offer would come at a high price!


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## trojan (13 Jul 2015)

44brendan said:


> This was never a single issue of "saving the Euro"! While a Grexit would have been un-palliative to the Eurozone it would not necessarily precipitate a break-up or a 2 tier Euro. All of the remaining "PIG" type countries have co-operated in reaching austerity type agreements and all are complying with these agreements to date. Iceland was in a better position than Greece to default because it was outside the Eurozone. Most of its problems were historical and they reverted to a balanced budgetary position without the need of extensive external funds. German/Finland proposal for a 5 year exit was the alternative option open to Greece and that appears to be a worse option for them than the very severe package now proposed.
> All current indications are that it will be supported in parliament by the opposition who are more right wing than Syrzia. Yes a Syrzia split is likely and either way it would appear that their time has come and gone.
> Very harsh decisions had to be made by Greece whatever agreement was reached. Anti -austerity approach is fine where a realistic alternative is put forward. However the funds have now dried up and Greece is now both insolvent and Illiquid. Banks are closed and the economy is descending into a cash only society. This is not sustainable for any economy and even the Left wing Syrzia realize that they are in a frying-pan/fire scenario.
> Unfortunately when the previous proposal was put to the Greek people the downside risk of a No vote was never adequately explained to them. Similarly when the troika entered Ireland had a Left wing Government put a choice to the people of austerity or no-austerity I'm sure it would also have been declined. Populism and realism are not frequent bedfellows. If so Joe Higgins and his party would be our next Government.
> While Government Economies are not quite similar to those of a family there are broad similarities. The main one being that if you continually spend more than you earn you will eventually run out of cash and credit. What would the borrowing costs to Greece be if the exited the Euro? Also who would lend to them without a budget program that would facilitate a return to a balanced budget scenario. Russia are not going to finance a soft bail-out and even Syrzia recognize that their offer would come at a high price!





44brendan said:


> This was never a single issue of "saving the Euro"! While a Grexit would have been un-palliative to the Eurozone it would not necessarily precipitate a break-up or a 2 tier Euro. All of the remaining "PIG" type countries have co-operated in reaching austerity type agreements and all are complying with these agreements to date. Iceland was in a better position than Greece to default because it was outside the Eurozone. Most of its problems were historical and they reverted to a balanced budgetary position without the need of extensive external funds. German/Finland proposal for a 5 year exit was the alternative option open to Greece and that appears to be a worse option for them than the very severe package now proposed.
> All current indications are that it will be supported in parliament by the opposition who are more right wing than Syrzia. Yes a Syrzia split is likely and either way it would appear that their time has come and gone.
> Very harsh decisions had to be made by Greece whatever agreement was reached. Anti -austerity approach is fine where a realistic alternative is put forward. However the funds have now dried up and Greece is now both insolvent and Illiquid. Banks are closed and the economy is descending into a cash only society. This is not sustainable for any economy and even the Left wing Syrzia realize that they are in a frying-pan/fire scenario.
> Unfortunately when the previous proposal was put to the Greek people the downside risk of a No vote was never adequately explained to them. Similarly when the troika entered Ireland had a Left wing Government put a choice to the people of austerity or no-austerity I'm sure it would also have been declined. Populism and realism are not frequent bedfellows. If so Joe Higgins and his party would be our next Government.
> While Government Economies are not quite similar to those of a family there are broad similarities. The main one being that if you continually spend more than you earn you will eventually run out of cash and credit. What would the borrowing costs to Greece be if the exited the Euro? Also who would lend to them without a budget program that would facilitate a return to a balanced budget scenario. Russia are not going to finance a soft bail-out and even Syrzia recognize that their offer would come at a high price!


Over past few months i have read mountains of news coverage about the Greek situation but I still dont know why they need 86 billion in a new bailout. A few simple facts would be appreciated to put my mind at ease


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## The_Banker (13 Jul 2015)

trojan said:


> Over past few months i have read mountains of news coverage about the Greek situation but I still dont know why they need 86 billion in a new bailout. A few simple facts would be appreciated to put my mind at ease


 
Looking at it as a non economist (just as Noonan isnt), they need the new bailout so that they can pay back the older bailouts.


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## Gerry Canning (13 Jul 2015)

If Greece can pull off the (new) austerity and stay in Euro ,in spite of the known historical fudges, it will be a major coup for EU + Greece.

I too would appreciate some clear facts.
I do understand that Greece has a lot of Civil Servants , how does that compare to us?
Does Greek Civil Servants include , Education/Health/Police etc  
Does Irish   Civil  Sevants include  , Education/Health /Police etc.

Is Irish OLd age pension comparable to Greece?


I am trying/hoping to compare like with like and only then will I, like our economists make a call.

I am not confident that the Spin Merchants (on both sides) want to give concise and comparable info.


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## Protocol (13 Jul 2015)

Civil service in Irl is about 30,000-35,000, only staff of departments.

Rest are public servants = teachers, Garda, doctors, etc.

Total is 300,000 approx in Irl.


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## Protocol (13 Jul 2015)

As I said before, only Ireland has a flat-rated pension, at 230.30 pw.

All other countries have pension linked to previous wages.

So there isn't a Greek pension rate to quote to you.


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## 44brendan (13 Jul 2015)

I have found great difficulty in obtaining a clear understanding of the rationale behind the current need for a bailout package of c82bln. Essentially the package is twofold:
1. Circa 32bln of additional direct bailout funds from the EU. These funds to come directly from EMU member states. (current total Greek debt is c320bln of which only 63bln is "private". rest is from EU, IMF, ECB)
2. 50 bln of an asset backed fund. This was to be controlled externally but it now appears that the Greeks themselves will have control of these funds. The funds are backed by State Assets. Seemingly some islands and other assets owned by the State. Th e50bln to be utilized as follows; -
- 25bln to facilitate a recapitalization of the banks and enable them to re-open.
- 12.5bln to decrease existing debt (unclear what debt this is!)
- 12.5bln to support an investment program (I.e. a capital spend)​Given that the last budget deficit was 6.3bln it would appear that the balance of bailout funds will be used to sustain the overspend over the next few years until a balanced budget is achieved. What is unclear is how much is due to be used to meet repayments on Debt/interest every year!

_Gerry;- Pension payments overall are 42bln pa or 17.5% of GDP. This is well at the top of the EU league. However I cannot get a direct comparison with other countries as figure includes both SW pensions and Public service pensions. Average pension payout would be less than Irelands as cost of living and average wage is below ours._


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## Sophrosyne (13 Jul 2015)

OECD’s Pensions At A Glance.

Greece starts at page 260

OECD’s Government At A Glance

Public sector employment statistics at page 85


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## Leo (13 Jul 2015)

Posted here by others before, but this article is well worth a read for the background. Particularly for the background on how it was loans to the Greek government that dragged the banking system down in the first place.


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## The_Banker (15 Jul 2015)

Looks like the IMF have shouted "the emperor has no clothes"

http://www.independent.ie/business/...l-for-massive-greek-debt-relief-31378280.html


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## Gerry Canning (15 Jul 2015)

Greece owes circa 300 billion, Value of Greek assets 50 Billion....
Irish Mortgage holder owes 300,000 ,Value of house 50,000.

Greece only has enough income to pay normal bills and a small debt burden.
Irish Mortgage holder has enough income to pay normal bills and a small mortgage.

Greece hasn,t a hope of repaying 300 billion.
Irish Mortgage holder hasn,t a hope of paying mortgage. 
......................
What to do .
Greece has debt reduced or re re stretched  from 300 to 50 ie has just nuff to continue.
Irish Mortgagee has debt reduced  or re re stretched from300 to 50 ie value of house.
......................................................

We then review in an ongoing manner
Greece ,to ensure long term sensible reforms are enacted.
Irish Mortgage , to recoup a reasonable % eg as values increase or to ensure he does not get a future windfall, as he gets back on his feet.
..................................................................................................
Means .
Greece has some hope of seeing light.
Irish mortgagee has some future hope.
..................................................................................
I fervently hope that the actuality of any agreement which is so soured with Greece and EU will permit a (get out ) for all.


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## 44brendan (15 Jul 2015)

This is effectively what is being proposed Gerry (other than the debt write-down). The reason that debt will not be written down is that this would create a similar demand from other countries such as Irl, Spain, Portugal Italy for a similar write-down. However as in the case you mention above the most important aspect of any deal to Greece is that the annual repayments are affordable. The terms of the deal are to ensure that Greece's ongoing budget returns to a level where it is both balanced and includes an element of debt/interest payments. Not getting a write-down might cause some miff but essentially the priority is that they get the funding assistance they currently need and a repayment schedule that they can make. This does involve increased "austerity" but generally economists see this as being the only realistic option to recovery (Paul Klugmann and some others excepted). I suppose any lender doing a similar deal with the mortgage holder in your illustration above would insist on some cut-back in spending if an agreement was to be reached.
Greece have had previous chances and previous bail-outs and were on the road to recovery fairly recently until government cuts were reversed by Syrzia. Similar scenario to Left Wing parties coming into power in Ireland and embarking on a reversal of cuts previously implemented. Its harsh but necessary!


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## Gerry Canning (15 Jul 2015)

44brendan,
Largely agree and hear you.
......................................
If it ends up as a case of the 300 Billion having been effectively written off ,provided Greece adheres to restructuring and that said restructuring does not create a (negative) austerity, ie too many cut-backs, we may avoid (for now) examination of other countries books.

I hope it works for the Greek people and I hope the Right wing elements in EU have not punished Greece too much..
I question was Greece really in recovery pre Syriza? Bear in mind these Left wingers are only in situ 5 months and were the Right wing incumbents any better?

Time will tell.


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## ashambles (15 Jul 2015)

Gerry Canning said:


> Greece owes circa 300 billion, Value of Greek assets 50 Billion....


50B is the amount they've been asked to sell. The value of Greek government assets would be in the hundreds of billions - maybe more than a trillion. Parks, land, buildings, military assets, state owned businesses - it's a big country.

So if you want to compare them with a mortgage holder it'd be more like someone with a million euro in assets, 100,000 in interest only debt and maybe an income of 25,000.

If Greece want to say their debt is unsustainable then sell some assets and make it more sustainable, looking for more cash and simultaneous write downs from the same creditors is not a sensible or fair strategy.


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## Agent 47 (15 Jul 2015)

Excellent breakdown of the Greece debt issue and where the billions have gone here


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## Gerry Canning (16 Jul 2015)

ashambles said:


> 50B is the amount they've been asked to sell. The value of Greek government assets would be in the hundreds of billions - maybe more than a trillion. Parks, land, buildings, military assets, state owned businesses - it's a big country.
> 
> So if you want to compare them with a mortgage holder it'd be more like someone with a million euro in assets, 100,000 in interest only debt and maybe an income of 25,000.
> 
> If Greece want to say their debt is unsustainable then sell some assets and make it more sustainable, looking for more cash and simultaneous write downs from the same creditors is not a sensible or fair strategy.


.....................................................................
Hmn ! like the way we sell some Nama assets ?
Seems to me fire sales are not the way to go, the winners seem to be the vultures and the amount got only dents the debt.

I have some sympathy with the view that wanting write down + more money is not on the face of it fair.
But then do Europe support Greece or let them hang?

Surely Ireland was not/is not a million miles away from a Greece?I do not think we will ever in real terms repay our nominated debt.
I have the feeling that had Greece not played (silly buggers) and made a realistic attempt at changes, Mrs Merkel etc would have been more understanding.


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