21 ms·

Greece draws up drachma plans, prepares to miss IMF payment

82 points by mixmax 12y ago

holoto 12y ago
Everyone can decide to not pay back lent money and it's his or her right to do so. It does make getting contracts in the future much more difficult though.
- venomsnake 12y ago
  I wish more people remembered this - breach of contract is business, not moral decision.
  - MattHeard 12y ago
    Many consider breaking promises to be wrong and contracts to be promises, and so consider breaching contracts to be immoral. Many others also consider the long-term negative consequences of breaching contracts to be worse than short-term positive consequences. If they consider short-term thinking at the cost of the long-term to be immoral, they would consider breaching contracts to be immoral. To you, breaching a contract might just be another IF-THEN which is implicitly or explicitly coded into the contract, but others consider it to have moral weight.
  - honksillet 12y ago
    I agree. Back when the financial crash happened and people were walking away from their mortgages, there was a lot of bloviating about those people's moral duty to pay their mortgages. There is no moral component to it at all. Only a financial one.
  - appleflaxen 12y ago
    If morality is determined by "do unto others as you would have them do unto you", then I think this probably is immoral. It's fairly low on the range of immoral behavior, but it shouldn't be a purely economic calculation, in my opinion.
    - icebraining 12y ago
      The creditor failed that by not offering the credit at zero interest, as they would have liked to have done unto them. Why should the golden rule only be applied one way?
      - appleflaxen 12y ago
        I don't understand your line of reasoning.
        icebraining 12y ago
        You are a lender of money. Someone asks you for money. What's the interest rate you should charge if you apply the golden rule? Zero, because that's what you would want to be charged. Therefore, the creditors in this case broke themselves the golden rule, and shouldn't complain that the debtors did also.
        ptaipale 12y ago
        Why would I want the lender to charge me zero interest? I know that she can't do that, particularly if I know I'm a risky borrower. I want a rate that is reasonable to the risk, because if I insist on a lower rate, I won't be able to borrow at all.
        appleflaxen 12y ago
        I think you are knocking down a straw man argument; namely that "the golden rule means 'give away everything you own'". I don't think anybody who would use the golden rule as a moral tool would really interpret it that way.
        icebraining 12y ago
        Not give away; I still wrote "lend".
- euccastro 12y ago
  Future contracts depend more on the position of a country than on its payment history. Consider Ecuador. It has better ratings and access to credit after it pursued aggressive debt haircuts.
  - jules 12y ago
    The difference is that the only reason Greece is able to loan money at all is because they are lending from the ECB/IMF at below market rates, an option which they will no longer have when they leave the EU and default on IMF loans.
    - euccastro 12y ago
      A non-difference is that most of those loans went to service old loans anyway. And the main reason Greece can't get loans on the markets is because its current debt is obviously unsustainable and its position as a deficit country in a badly designed monetary union is hopeless.
      - jules 12y ago
        You hit the nail on the head with the position as a deficit country: Greece will have to solve that whether it stays in the EU or not. The question is which way to achieve that is harsher: the political force of the EU, or the market force Greece will have to endure when it goes back to its own currency. I think the latter will be harsher, since nobody has any incentive to keep Greece afloat other than if it generates a personal gain, whereas if Greece stays in the EU then countries like Germany have a greater interest in keeping Greece afloat to prevent destabilization of the EU. Therefore they will funnel money into Greece at rates that have negative return on investment if you look purely at Greece, but which will have positive return on investment if you factor in that it keeps the EU stable. The market however, has no such incentive.
vixen99 12y ago
And with the first hard Left government in Europe since WW2, Russia looks forward to an enhanced presence in southern Europe and the Mediterranean. “Russian-Greek relations have very deep roots in history,” says Tsipras.
- stingraycharles 12y ago
  This is not what the article says. Please refrain from adding noise to the discussion.
  - mtrimpe 12y ago
    It's actually rather relevant geopolitical commentary. If Greece won't be getting money from the IMF they will after all need to find a new monetary partner. There have been clear overtures in that direction already and key party officials already have long-standing relationships with one of Russia's most extreme and influential ideologues [1]. Not to mention that the article itself clearly mentions the visit to Putin on 8th of April; one day before the possible default. [1] http://www.rferl.org/content/greek-syriza-deep-ties-russian-eurasianist-dugin/26818523.html http://www.rferl.org/content/greek-syriza-deep-ties-russian-...
    - kansface 12y ago
      Its really hard to imagine anyone giving Greece even more money after a default to the IMF.
      - roymurdock 12y ago
        Agreed. First line of the article: "Greece is drawing up drastic plans to nationalise the country's banking system and introduce a parallel currency to pay bills" The solution is for Greece to either (1) cash out of euros into another nation's currency for the time being or (2) create their own currency and start stocking the Greek banks with it. Not sure what kind of purchasing power a new Greek currency would have outside of Greece though. I'd say the more likely option would be for them to default, sell their remaining Euros for USD (further undermining the price and credibility of the Euro). Not sure if this is possible and it would likely get really messy.
tdkl 12y ago
Good. I wonder who will follow next.
- webnrrd2k 12y ago
  I haven't been following the news for a while, but I'd start looking at the other PIGS economies.
- holoto 12y ago
  Not sure this will work when countries do not pay back credits or bonds. Most countries today need to raise money to finance their spending. If everyone does this, the lending market will break down. Not sure that this helps those countries that depended on credits most (like Greece). I'm also not sure if it is the best strategy for Greece to bite the hand (EU as the IWF is just the beginning) who transfered billions of $ to Greece over the last decades. If the Greece government has a plan to not depend on credit and EU subsidies in the future, hurray to them. Perhaps with the new Russian conflict they could trade in EU subsidies and wealth transfer to renting bases to Russia. But they will find out it's much harder to break a 100 year contract for a Russian base in Greece than a contract with the IWF. If not, this looks like a bad move.
  - nspattak 12y ago
    "I'm also not sure if it is the best strategy for Greece to bite the hand (EU as the IWF is just the beginning) who transfered billions of $ to Greece over the last decades." No one gives away any amount of mouney, let alone billions of them. I think you should inform yourself better before forming an opinion.
    - ptaipale 12y ago
      > No one gives away any amount of mouney, let alone billions of them. Much of modern government is about giving away other people's money.
  - trhway 12y ago
    >Perhaps with the new Russian conflict they could trade in EU subsidies and wealth transfer to renting bases to Russia. But they will find out it's much harder to break a 100 year contract for a Russian base in Greece than a contract with the IWF. It isn't a base currently, it is natural gas pipeline ("New Blue Stream"). Bolgaria - under pressure from US/EU - has recently refused "South Stream" and thus Russia's acute need for new way into Europe met Greece's souring relationship with EU. And yes, gas pipeline is a contract which is pretty hard to break.
deleted 12y ago
[deleted]
- ZeroGravitas 12y ago
  I'd guess it's because many fiscally right wing parties support "austerity" programs that cut social services even in normal times. Note that the article claims that the recent deal was deemed problematic because the government wanted to give more power to unions and larger pensions to poor people. Basically the IMF enforces right-wing policies via "disaster capitalism".
  - holoto 12y ago
    The discussion over the last months was not about austerity - this was an 2014 topic - but about a plan for the future. The greek government did provide a plan without much detail, one you would not get any money from your bank for a house or any money - this is HN - from a VC. Greece hopes to get billions of $ based on some napkin calculations. Reason is Greece does not want to commit to any foreign influence because it feels nationally threatened. The IMF enforces a way by which it hopes to a.) get the money back it puts in b.) no need to put money back in 5y in the future. You could make this about money or investment, or you can make this about right-wing/left-wing.
    - x0x0 12y ago
      Well, it's created by relatively simple facts: a less productive periphery without the aid of a floating currency will require permanent subsidization by the more productive core or the end of the currency union. Now everyone has to pick.
      - deleted 12y ago
        [deleted]
      - holoto 12y ago
        Yes and hopefully Germany picks an Euro exit. As is clear to anyone interested in the topic and listening to French government officials, binding Germany in the Euro was the price for reunification.
wesleyy 12y ago
'“We are a Left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” said a senior official.' Wow, what an incredibly entitled attitude to hold.
- nhstanley 12y ago
  What's so entitled about it? The IMF is a creditor just like any other, and assumes risks when it makes loans. The duty of the Greek government is—without question—to its people. While you can certainly argue that default is not in the people's best interest, if the leaders honestly think that's the best option then that's what they should do.
  - blumkvist 12y ago
    They don't honestly think that. They know very well what they promised is stupid. It's just that left-wing people are a lot better at making promises than at living by them.
    - blumkvist 12y ago
      Down-vote more, commies!
  - raverbashing 12y ago
    The IMF is a creditor just like any other, -> and assumes risks when it makes loans <- Exactly this All that Greece and the institutions that lent money to them did was to push the problem forward and make it worse Greece has basically two options: deflate their prices in Euro (what austerity ends up doing) or have a currency that can float. It's that simple (Or having a stronger fiscal union in the Eurozone, but that's hard as well)
    - caf 12y ago
      Note that "prices" here is an expansive sense of the word that includes wages.
infraruby 12y ago
> No developed country has ever defaulted to the Bretton Woods institutions. How is this different to the https://en.wikipedia.org/wiki/Nixon_Shock https://en.wikipedia.org/wiki/Nixon_Shock?
- logicallee 12y ago
  it's similar; getting off the gold standard allows you to print money, and insofar as they don't have the right to print Euros and therefore it is like Gold (can't be created by fiat, by them at least, they have to get it from somewhere), introducing their own floating money is very similar. A better solution would be to integrate the Greek economy into a paneuropean federal country, that simply eats the losses of Greece. I am certain some states in America are net beneficiaries of federal spending (more government dollars flow into it than are retrieved through taxes.) This is likely a lot better solution than local currencies: I would back a (metaphorical) 'civil war' (being on the side of the North of course) in Europe in which countries are really kind of shoehorned back into a federal European country under centralized rule, a central constitution, and with limitations on 'state rights'. (Note that all the while, as in the analogy, this central federal paneuropean country would remain democratic.) I've never heard anyone else express this opinion though. EDIT: I don't mean civil war literally of course, and have edited to clarify. I was just drawing an analogy with the South seceding from the union. Obviously there is 0 chance of any actual war, nor would anyone want one for a minute. The difference between past wars is that there actually are democratic European institituions - i.e. the EU - just as America remained democratic through and after its civil war.
  - youngtaff 12y ago
    So much for democracy and the will of people to choose their own course. What you're suggesting is a United States of Europe, which many of use in Europe don't want and certainly not by force.
  - lifeisstillgood 12y ago
    The goal of sharing wealth to encourage social betterment is a laudable and positive goal. The idea of closer political union to avoid another war is also a good one. However they are not necessarily going to go hand in hand - but I cannot think of a case where they did not. Mostly cos political conquest in empires lead to wealth "sharing" - the common idea was transaction costs dropped under one empire increasing the wealth beyond taxation costs. This is something Eurozone has done well without actual war - but it seems to have reached the point where we are either all in for the Euro (total fair wealth sharing) or just give up. However selling "total state level socialism" (from States that have to states that do not) is a hard sell - even if right here and now, that's how Greece looks the best solution. However every country thinks it needs to keep it's own wealth and not give up it's sovereignty - but this is like tribes who used to live in the countries themselves - they have up Independance for security and prosperity. It's a hard sell.
holoto 12y ago
“We are a Left-wing government." The government is a coalition of right wing nationalists and left wing - nationalistic - marxists. Not sure why this should be called a left wing government. Calling the government left-wing is marketing to get sympathies with leftist people in Europe. So I'd rather call the government nationalistic populist.
- lvs 12y ago
  The problem is that this article is from a typically conservative source. It's not written as straight news.
  - ptaipale 12y ago
    As if other sources would always write their stories as straight news. Try to read The Guardian. However, what's written seems not far from truth. Other sources have been reporting how Greece is running out of cash. Feb 6: http://www.wsj.com/articles/greece-could-run-out-of-cash-in-weeks-1423212223 http://www.wsj.com/articles/greece-could-run-out-of-cash-in-... Mar 23: http://business.financialpost.com/business-insider/greeces-government-has-only-2-weeks-until-the-money-runs-out-report http://business.financialpost.com/business-insider/greeces-g... Apr 2: http://www.reuters.com/article/2015/04/02/us-eurozone-greece-liquidity-idUSKBN0MT1HB20150402 http://www.reuters.com/article/2015/04/02/us-eurozone-greece... And now, with "finance ministry officials are categorically denying any suggestion that Greek representatives said the country would run out of cash" I think could be confirmed that Greece is running out of cash. http://www.theguardian.com/business/live/2015/apr/02/greece-reform-plan-bailout-markets-live-updates http://www.theguardian.com/business/live/2015/apr/02/greece-...
  - TazeTSchnitzel 12y ago
    There is no such thing as an unbiased news source and anyone who claims to be one is delusional or lying.
- icebraining 12y ago
  It's called left-wing because Syriza has 149 seats while the right-wing party only has 13. While they are a coalition, they don't have the same power.
crististm 12y ago
"If you have to take an onerous deal against your people with your enemies, better die by their sword" - Stefan the Great
- userulluipeste 12y ago
  I agree with Ștefan (and with the lessons that history provides), but I have to disagree with the context in which this is put. We were talking about Europe here (well, the Eurozone part of it, which is nothing but a level of integration), where we talk about "us" on a broad (unional) level, about solving problems that we all have in our court. The next thing you know is a shift in prospective, where "us" got restricted on a national level (guess why and on who's interest), and now the rest of what was formerly "(the non-Greek part of European) us" you count as "enemies". Maybe we are more different than we wanted to admit, and we may have to work harder for what makes us "us (in an acceptable formula)", but we are not enemies.
Gatsky 12y ago
There is some degree of hostility towards Greece in this thread (albeit mostly from 2 people, one of whom joined HN 30 minutes ago). It seems appropriate to point out that it is public knowledge that the EU was/is irrationally hostile towards Greece during the Eurozone crisis.[0] Now they have to play high stakes fiscal politics with a very clever bunch of largely unrestrained leftists. Frankly, they can't blame anyone else for this problem. [0] http://www.telegraph.co.uk/finance/economics/11226828/Tim-Geithner-reveals-in-the-raw-how-Europes-leaders-tried-to-commit-financial-suicide.html http://www.telegraph.co.uk/finance/economics/11226828/Tim-Ge...
- makeitsuckless 12y ago
  "irrationally hostile" Yes, very "irrational", after discovering that Greece had blatantly lied about pretty much everything relevant to the Eurozone. Wars have been fought over a lot less.
  - youngtaff 12y ago
    Yes, Greece isn't blameless but Let's not forget the Germany and France were the first to break the Euro's rules and the rule were changed so they weren't fined. http://www.bbc.co.uk/news/world-europe-16761087 http://www.bbc.co.uk/news/world-europe-16761087
  - gawa 12y ago
    When you let anger and resentment dictate your policy, yes you're being irrational, by definition. It was like 7 years ago. Now there's a difficult situation (a debt realistically impossible to pay) and different people in charge (not thieves and Goldman Sachs anymore [1]). Let's focus on viable solutions. [1] http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html http://www.spiegel.de/international/europe/greek-debt-crisis...
  - Gatsky 12y ago
    Don't get me wrong, the EU had every right to be angry, it's just preferable that the people in charge of billions of euros and the well being of millions don't pursue tacit vendettas in lieu of good fiscal policy, which is the point made in the referenced article.
davidw 12y ago
Odd. I don't see the same kinds of news - making it look like a Greek exit is imminent - elsewhere, like ft.com or wsj.com, who certainly cover this kind of thing.
- TazeTSchnitzel 12y ago
  The telegraph is right-wing and eurosceptic. Maybe they're trying to create panic.
  - davidw 12y ago
    If it's a political article, it's probably best to just flag it, as per the guidelines.
- ptaipale 12y ago
  The subject has been around and progressing: http://www.wsj.com/articles/banks-ready-contingency-plans-in-case-of-greek-eurozone-exit-1420975504 http://www.wsj.com/articles/banks-ready-contingency-plans-in... http://www.nytimes.com/2015/03/19/business/international/warnings-raised-of-a-greek-exit-from-the-euro.html?_r=0 http://www.nytimes.com/2015/03/19/business/international/war... http://www.ft.com/cms/s/0/47aa4dce-d2f7-11e4-b7a8-00144feab7de.html http://www.ft.com/cms/s/0/47aa4dce-d2f7-11e4-b7a8-00144feab7...
  - davidw 12y ago
    Sure, I've been following it pretty closely, as 1) it's interesting, and 2) I live in Italy, where we could potentially see some repercussions. However, this article - and especially the headline - make things sound quite imminent. It wouldn't be the first to mention capital controls or something else happening the weekend following this one, but they make it sound much more probable than others have.
lifeisstillgood 12y ago
We are already printing a trillion Euros in the current round of QE / stimulation. Why not make that 500 Bn more and use that imaginary money to release the economies of Greece Spain and Portugal. With the carrot of debt freedom, almost all economic and structural reforms become possible.
- wfn 12y ago
  Probably a matter of setting precedent vs. not setting precedent, etc.?
- pjc50 12y ago
  The political objective of the EU rightwing consensus is the opposite: use the debt as leverage to maintain political control.
- xxxyy 12y ago
  That would be only delaying the issue, as QE is a program of buying bonds with imaginary money, not giving out the imaginary money for free. Bonds have maturity dates. http://www.forbes.com/sites/robertlenzner/2013/11/25/the-fed-has-been-cornering-the-treasury-market-for-the-past-four-years/ http://www.forbes.com/sites/robertlenzner/2013/11/25/the-fed...
  - lifeisstillgood 12y ago
    I'm not sure about that. Buying bonds is merely one of many mechanisms to stimulate demand in the assumption we are in a demand poor crisis. Demand in Greece is sooo depressed because of the enormous debt that relieving it at all will have a positive demand experience. Add to which Keynes original idea is to bury the money in bottles and any form of monetary supply increase is good. I think I agree with downthread - finances as a form of control - it's a banker mentality.
roymurdock 12y ago
It's going to be really interesting to see how far creditors are willing to go in order to get the money that Greece either (A) doesn't have or (B) is unwilling to pay. I think (A) is more applicable in Greece's case. The Euro has favored export economies, such as Germany's, for the past decade. Greece needs a currency that will support its economy, which is much different than Germany's. The Euro's benefits of easier inter-Europe trade and increased European power in the global currency markets have been far outweighed by its inability to cater to the very different economies of the various EU nations. It's important to look at who owns Greece's debt to see who is really pushing for repayment. [0] The EFSF owns 45% of the government's 315bn Euro debt. Amazingly, according to the EFSF's last financial statement in 2013: "As at [sic] 31 December 2013, the EFSF as an issuer has been assigned an AA rating by Standard & Poor's, an Aa1 rating by Moody's and an AA+ by Fitch Ratings and the highest possible short-term rating from all three major credit rating agencies — Standard and Poor's (A-1+); Moody's (P-1) and Fitch Ratings (F1+)." Germany, Italy, and France own the largest number of shares of the EFSF with Germany at 771k, France at 579k, and Italy at 509k. Most of the other countries own anywhere from 5k-100k shares. [1] I just wonder if people are going to get greedy/desperate enough to pull a vulture bank maneuver and start seizing real assets - see the seizure of an Argentinian Naval Vessel by hedge fund Elliot Capital. [2] Now that would be a very messy affair. [0] http://www.bloomberg.com/news/articles/2015-02-02/greece-seeks-third-debt-restructuring-who-s-on-the-hook- http://www.bloomberg.com/news/articles/2015-02-02/greece-see... [1] http://www.efsf.europa.eu/attachments/EFSF%20Financial%20Statements311213.pdf http://www.efsf.europa.eu/attachments/EFSF%20Financial%20Sta... [2] http://www.nytimes.com/2012/10/19/world/americas/seizure-of-argentine-ship-forces-shake-up.html http://www.nytimes.com/2012/10/19/world/americas/seizure-of-...
- taliesinb 12y ago
  > I just wonder if people are going to get greedy/desperate enough to pull a vulture bank maneuver and start seizing real assets - see the seizure of an Argentinian Naval Vessel by hedge fund Elliot Capital. [2] Now that would be a very messy affair. That would be basically be war, but fought with economic weapons. I like to think that Europe is not at that stage yet (and hopefully never will be).
- twobits 12y ago
drapper 12y ago
I'm full of ambivalent feelings towards Syriza, on one hand they are (were) a nice breath of fresh air, a promise of some positive change, on the other: they turned out to be kinda arrogant, kinda short-sighted and pretty bad at diplomacy. Politics isn't about being right 100% of time (not that they were), it's about being effective, and in that they are lacking badly. Seems they entered this whole thing with this cocky approach of "now we'll show 'em, them dumb fucks!". They've got their wrists slapped for that and now complain again on how bad EU is treating them. Hard to get sympathy for that. Good article on this from Foreign Affairs: http://www.foreignaffairs.com/articles/143294/david-gordon-and-thomas-wright/syriza-stumbles http://www.foreignaffairs.com/articles/143294/david-gordon-a... Some quotes: "Yanis Varoufakis, the Greek Finance Minister, for one, singled out Italy for having debt that was “unsustainable,” which served only to infuriate Italian Finance Minister Pier Carlo Padoan" "Within a day of winning the Greek election, he (Tsipras) called the Russian ambassador and protested the EU’s statement condemning Russian-backed Ukrainian separatists for an attack on civilians in a Mariupol market" "But even then, Greece could have survived its mistakes were it not for one other fatal decision: to move forward with its electoral platform before renegotiating its debt, increasing government spending without the requisite funds and reversing or stalling key reforms (...) All these factors positioned Greece to buckle in its negotiations. It was simply hemorrhaging far too much money far too fast to hold its position."
- icebraining 12y ago
  Have you considered the apparent arrogance might be a strategy?
  - cmdkeen 12y ago
    It's a really bad strategy in that it doesn't prepare the Greek people for anything bad happening. The short term consequences of Greece crashing out of the Euro is going to be very painful for Greece.
    - taliesinb 12y ago
      > The short term consequences of Greece crashing out of the Euro is going to be very painful for Greece. For Greece? Greece will recover, and it's hard to do worse than it is currently doing. And as others say, a floating currency will help correct the imbalance of an exporter like Germany dominating the EU. And bizarrely, I suspect investment will be quick to return if Greece is seen as being out from under its cloud. Investors seem to care less about previous behavior than about future prospects. > It's a really bad strategy in that it doesn't prepare the Greek people for anything bad happening. No... Germany stands to lose the most, because the likely eventual outcome is the collapse of the entire monetary union, and the wide markets that Germany has enjoyed.
holoto 12y ago
I applaud the Greek Government. They show how important a nationalistic point of view is (as in "Greece first"). For 70 years no German Government could win on a nationalistic ticket. The vast majority of German elites were pro-Europe. The majority of people saw the billions of $ wealth transfer to the southern and eastern countries as moral compensation for the war. With comparing the elected German chancellor to Hitler, comparing the finance minister to a concentration camp manager and the talk of reparations, Germans felt insulted and black mailed and Greece created cracks in the above narrative. The Greek government achieved that the next German government and generation of conservatives will win on a nationalistic ticket to fend of right wing anti European parties like the AfD (Alternative For Germany). Which is good, as the best for Germany is not a political union like the EU but TTIP and something like NAFTA combined with a China style currency policy. The EU helps small countries gain disproportional power and poor countries gain money transfers while it binds and hinders Germany and France. The US does what's best for the US for the last 200 years. A proud symbol to learn from. Next step could be the UK EU exit, FN in France will help, TTIP and with Polish NAFTA love this could be the first stepping stones for an unpolitical economic union.
userulluipeste 12y ago
Greece got in European Union too easy and this is the consequence. If Greece gets out, it would shake the faith in the E.U., true, but on the other hand that may be a good move for everyone. For E.U. in the way of not having more problems that it can handle and finally spending attention on things that are rather "not so important" right now. For Greece, it would be a much-needed "time alone", to get to truly understand the price and meaning of a few things. They seem to haven't had enough time for that.
- euccastro 12y ago
  The day after Greece gets out the EU will have more and bigger problems than the day before.
  - jules 12y ago
    Though insignificant compared to the problems that Greece will have.
    - euccastro 12y ago
      Don't be so sure.
      - jules 12y ago
        Greece has a relatively small industrial sector and relies very heavily on imports, which will be completely unaffordable with a new currency. Their huge tourism sector will suffer when they go out of the EU. Their productivity per hour worked is very low. They still have a huge corruption and nepotism problem, an a people who will have to scale back their standard of living. Comparable to the trouble a country like Germany will be in when Greece leaves the Euro? I don't think so.
        euccastro 12y ago
        I'm not disagreeing categorically, but I don't think it's that one-sided. I was (i) considering the cascading effect of a Greek exit from the Euro, and (ii) thinking in relative terms: I'm not arguing that Germany will be worse off, but perhaps it has more to lose at this point. Re: the cascading effect: http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and-why-the-efsfs-size-does-not-matter/ http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and... I'm aware that this article describes the dynamics of countries going to the receiving side of EFSF, not of countries leaving the Euro altogether, but I think the perverse dynamics described apply to the latter too. Relying heavily on exports, as Germany does, may mean you have more to lose in a crisis like this. Consider what happens after a few more European countries stop generating demand for German goods, at the same time that demand from the US is weak too. Demand from the rest of EU and from the US was a big part of what made Germany 'a country like Germany'. https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/ForeignTrade/TradingPartners/Current.html https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvir... Yes, imports would be unaffordable for Greece with the new currency and that will generate a lot of pain (not that devoting a big share of the national budget to servicing debt is helping a lot), but that will also force the country to correct that imbalance, making what's left of local industry more competitive. That pain would be a price to pay for adapting to a more self-reliant setup, while the one currently being endured (mostly on ideological grounds, I claim) seems more pointless. Re: tourism, having their own currency to devaluate might help with that. Re: standard of living, it's not like Greece's current situation, and their prospects within the demands of the memorandum are rosy either. Corruption and nepotism won't help, but they aren't helping within the Euro either. If anything, those problems are made worse in colonial economies, which the deficit countries in Europe have been, for good and ill, to a large extent. All in all, a Greek exit from the eurozone is a big lose-big lose proposition for anyone. I don't think it matters a whole lot who stands to lose more. But to the extent that it matters, I think it must be considered in relative terms. Overall, Germany has a better deal in the Eurozone than Greece, and it has more to lose.

82 points by mixmax 12y ago

Everyone can decide to not pay back lent money and it's his or her right to do so. It does make getting contracts in the future much more difficult though.

venomsnake 12y ago
I wish more people remembered this - breach of contract is business, not moral decision.
- MattHeard 12y ago
  Many consider breaking promises to be wrong and contracts to be promises, and so consider breaching contracts to be immoral. Many others also consider the long-term negative consequences of breaching contracts to be worse than short-term positive consequences. If they consider short-term thinking at the cost of the long-term to be immoral, they would consider breaching contracts to be immoral. To you, breaching a contract might just be another IF-THEN which is implicitly or explicitly coded into the contract, but others consider it to have moral weight.
- honksillet 12y ago
  I agree. Back when the financial crash happened and people were walking away from their mortgages, there was a lot of bloviating about those people's moral duty to pay their mortgages. There is no moral component to it at all. Only a financial one.
- appleflaxen 12y ago
  If morality is determined by "do unto others as you would have them do unto you", then I think this probably is immoral. It's fairly low on the range of immoral behavior, but it shouldn't be a purely economic calculation, in my opinion.
  - icebraining 12y ago
    The creditor failed that by not offering the credit at zero interest, as they would have liked to have done unto them. Why should the golden rule only be applied one way?
    - appleflaxen 12y ago
      I don't understand your line of reasoning.
      - icebraining 12y ago
        You are a lender of money. Someone asks you for money. What's the interest rate you should charge if you apply the golden rule? Zero, because that's what you would want to be charged. Therefore, the creditors in this case broke themselves the golden rule, and shouldn't complain that the debtors did also.
        ptaipale 12y ago
        Why would I want the lender to charge me zero interest? I know that she can't do that, particularly if I know I'm a risky borrower. I want a rate that is reasonable to the risk, because if I insist on a lower rate, I won't be able to borrow at all.
        appleflaxen 12y ago
        I think you are knocking down a straw man argument; namely that "the golden rule means 'give away everything you own'". I don't think anybody who would use the golden rule as a moral tool would really interpret it that way.
        icebraining 12y ago
        Not give away; I still wrote "lend".
euccastro 12y ago
Future contracts depend more on the position of a country than on its payment history. Consider Ecuador. It has better ratings and access to credit after it pursued aggressive debt haircuts.
- jules 12y ago
  The difference is that the only reason Greece is able to loan money at all is because they are lending from the ECB/IMF at below market rates, an option which they will no longer have when they leave the EU and default on IMF loans.
  - euccastro 12y ago
    A non-difference is that most of those loans went to service old loans anyway. And the main reason Greece can't get loans on the markets is because its current debt is obviously unsustainable and its position as a deficit country in a badly designed monetary union is hopeless.
    - jules 12y ago
      You hit the nail on the head with the position as a deficit country: Greece will have to solve that whether it stays in the EU or not. The question is which way to achieve that is harsher: the political force of the EU, or the market force Greece will have to endure when it goes back to its own currency. I think the latter will be harsher, since nobody has any incentive to keep Greece afloat other than if it generates a personal gain, whereas if Greece stays in the EU then countries like Germany have a greater interest in keeping Greece afloat to prevent destabilization of the EU. Therefore they will funnel money into Greece at rates that have negative return on investment if you look purely at Greece, but which will have positive return on investment if you factor in that it keeps the EU stable. The market however, has no such incentive.

vixen99 12y ago

And with the first hard Left government in Europe since WW2, Russia looks forward to an enhanced presence in southern Europe and the Mediterranean. “Russian-Greek relations have very deep roots in history,” says Tsipras.

stingraycharles 12y ago
This is not what the article says. Please refrain from adding noise to the discussion.
- mtrimpe 12y ago
  It's actually rather relevant geopolitical commentary. If Greece won't be getting money from the IMF they will after all need to find a new monetary partner. There have been clear overtures in that direction already and key party officials already have long-standing relationships with one of Russia's most extreme and influential ideologues [1]. Not to mention that the article itself clearly mentions the visit to Putin on 8th of April; one day before the possible default. [1] http://www.rferl.org/content/greek-syriza-deep-ties-russian-eurasianist-dugin/26818523.html http://www.rferl.org/content/greek-syriza-deep-ties-russian-...
  - kansface 12y ago
    Its really hard to imagine anyone giving Greece even more money after a default to the IMF.
    - roymurdock 12y ago
      Agreed. First line of the article: "Greece is drawing up drastic plans to nationalise the country's banking system and introduce a parallel currency to pay bills" The solution is for Greece to either (1) cash out of euros into another nation's currency for the time being or (2) create their own currency and start stocking the Greek banks with it. Not sure what kind of purchasing power a new Greek currency would have outside of Greece though. I'd say the more likely option would be for them to default, sell their remaining Euros for USD (further undermining the price and credibility of the Euro). Not sure if this is possible and it would likely get really messy.

tdkl 12y ago

Good. I wonder who will follow next.

webnrrd2k 12y ago
I haven't been following the news for a while, but I'd start looking at the other PIGS economies.
holoto 12y ago
Not sure this will work when countries do not pay back credits or bonds. Most countries today need to raise money to finance their spending. If everyone does this, the lending market will break down. Not sure that this helps those countries that depended on credits most (like Greece). I'm also not sure if it is the best strategy for Greece to bite the hand (EU as the IWF is just the beginning) who transfered billions of $ to Greece over the last decades. If the Greece government has a plan to not depend on credit and EU subsidies in the future, hurray to them. Perhaps with the new Russian conflict they could trade in EU subsidies and wealth transfer to renting bases to Russia. But they will find out it's much harder to break a 100 year contract for a Russian base in Greece than a contract with the IWF. If not, this looks like a bad move.
- nspattak 12y ago
  "I'm also not sure if it is the best strategy for Greece to bite the hand (EU as the IWF is just the beginning) who transfered billions of $ to Greece over the last decades." No one gives away any amount of mouney, let alone billions of them. I think you should inform yourself better before forming an opinion.
  - ptaipale 12y ago
    > No one gives away any amount of mouney, let alone billions of them. Much of modern government is about giving away other people's money.
- trhway 12y ago
  >Perhaps with the new Russian conflict they could trade in EU subsidies and wealth transfer to renting bases to Russia. But they will find out it's much harder to break a 100 year contract for a Russian base in Greece than a contract with the IWF. It isn't a base currently, it is natural gas pipeline ("New Blue Stream"). Bolgaria - under pressure from US/EU - has recently refused "South Stream" and thus Russia's acute need for new way into Europe met Greece's souring relationship with EU. And yes, gas pipeline is a contract which is pretty hard to break.

deleted 12y ago

[deleted]

ZeroGravitas 12y ago
I'd guess it's because many fiscally right wing parties support "austerity" programs that cut social services even in normal times. Note that the article claims that the recent deal was deemed problematic because the government wanted to give more power to unions and larger pensions to poor people. Basically the IMF enforces right-wing policies via "disaster capitalism".
- holoto 12y ago
  The discussion over the last months was not about austerity - this was an 2014 topic - but about a plan for the future. The greek government did provide a plan without much detail, one you would not get any money from your bank for a house or any money - this is HN - from a VC. Greece hopes to get billions of $ based on some napkin calculations. Reason is Greece does not want to commit to any foreign influence because it feels nationally threatened. The IMF enforces a way by which it hopes to a.) get the money back it puts in b.) no need to put money back in 5y in the future. You could make this about money or investment, or you can make this about right-wing/left-wing.
  - x0x0 12y ago
    Well, it's created by relatively simple facts: a less productive periphery without the aid of a floating currency will require permanent subsidization by the more productive core or the end of the currency union. Now everyone has to pick.
    - deleted 12y ago
      [deleted]
    - holoto 12y ago
      Yes and hopefully Germany picks an Euro exit. As is clear to anyone interested in the topic and listening to French government officials, binding Germany in the Euro was the price for reunification.

wesleyy 12y ago

'“We are a Left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” said a senior official.' Wow, what an incredibly entitled attitude to hold.

nhstanley 12y ago
What's so entitled about it? The IMF is a creditor just like any other, and assumes risks when it makes loans. The duty of the Greek government is—without question—to its people. While you can certainly argue that default is not in the people's best interest, if the leaders honestly think that's the best option then that's what they should do.
- blumkvist 12y ago
  They don't honestly think that. They know very well what they promised is stupid. It's just that left-wing people are a lot better at making promises than at living by them.
  - blumkvist 12y ago
    Down-vote more, commies!
- raverbashing 12y ago
  The IMF is a creditor just like any other, -> and assumes risks when it makes loans <- Exactly this All that Greece and the institutions that lent money to them did was to push the problem forward and make it worse Greece has basically two options: deflate their prices in Euro (what austerity ends up doing) or have a currency that can float. It's that simple (Or having a stronger fiscal union in the Eurozone, but that's hard as well)
  - caf 12y ago
    Note that "prices" here is an expansive sense of the word that includes wages.

infraruby 12y ago

> No developed country has ever defaulted to the Bretton Woods institutions. How is this different to the https://en.wikipedia.org/wiki/Nixon_Shock https://en.wikipedia.org/wiki/Nixon_Shock?

logicallee 12y ago
it's similar; getting off the gold standard allows you to print money, and insofar as they don't have the right to print Euros and therefore it is like Gold (can't be created by fiat, by them at least, they have to get it from somewhere), introducing their own floating money is very similar. A better solution would be to integrate the Greek economy into a paneuropean federal country, that simply eats the losses of Greece. I am certain some states in America are net beneficiaries of federal spending (more government dollars flow into it than are retrieved through taxes.) This is likely a lot better solution than local currencies: I would back a (metaphorical) 'civil war' (being on the side of the North of course) in Europe in which countries are really kind of shoehorned back into a federal European country under centralized rule, a central constitution, and with limitations on 'state rights'. (Note that all the while, as in the analogy, this central federal paneuropean country would remain democratic.) I've never heard anyone else express this opinion though. EDIT: I don't mean civil war literally of course, and have edited to clarify. I was just drawing an analogy with the South seceding from the union. Obviously there is 0 chance of any actual war, nor would anyone want one for a minute. The difference between past wars is that there actually are democratic European institituions - i.e. the EU - just as America remained democratic through and after its civil war.
- youngtaff 12y ago
  So much for democracy and the will of people to choose their own course. What you're suggesting is a United States of Europe, which many of use in Europe don't want and certainly not by force.
- lifeisstillgood 12y ago
  The goal of sharing wealth to encourage social betterment is a laudable and positive goal. The idea of closer political union to avoid another war is also a good one. However they are not necessarily going to go hand in hand - but I cannot think of a case where they did not. Mostly cos political conquest in empires lead to wealth "sharing" - the common idea was transaction costs dropped under one empire increasing the wealth beyond taxation costs. This is something Eurozone has done well without actual war - but it seems to have reached the point where we are either all in for the Euro (total fair wealth sharing) or just give up. However selling "total state level socialism" (from States that have to states that do not) is a hard sell - even if right here and now, that's how Greece looks the best solution. However every country thinks it needs to keep it's own wealth and not give up it's sovereignty - but this is like tribes who used to live in the countries themselves - they have up Independance for security and prosperity. It's a hard sell.

holoto 12y ago

“We are a Left-wing government." The government is a coalition of right wing nationalists and left wing - nationalistic - marxists. Not sure why this should be called a left wing government. Calling the government left-wing is marketing to get sympathies with leftist people in Europe. So I'd rather call the government nationalistic populist.

lvs 12y ago
The problem is that this article is from a typically conservative source. It's not written as straight news.
- ptaipale 12y ago
  As if other sources would always write their stories as straight news. Try to read The Guardian. However, what's written seems not far from truth. Other sources have been reporting how Greece is running out of cash. Feb 6: http://www.wsj.com/articles/greece-could-run-out-of-cash-in-weeks-1423212223 http://www.wsj.com/articles/greece-could-run-out-of-cash-in-... Mar 23: http://business.financialpost.com/business-insider/greeces-government-has-only-2-weeks-until-the-money-runs-out-report http://business.financialpost.com/business-insider/greeces-g... Apr 2: http://www.reuters.com/article/2015/04/02/us-eurozone-greece-liquidity-idUSKBN0MT1HB20150402 http://www.reuters.com/article/2015/04/02/us-eurozone-greece... And now, with "finance ministry officials are categorically denying any suggestion that Greek representatives said the country would run out of cash" I think could be confirmed that Greece is running out of cash. http://www.theguardian.com/business/live/2015/apr/02/greece-reform-plan-bailout-markets-live-updates http://www.theguardian.com/business/live/2015/apr/02/greece-...
- TazeTSchnitzel 12y ago
  There is no such thing as an unbiased news source and anyone who claims to be one is delusional or lying.
icebraining 12y ago
It's called left-wing because Syriza has 149 seats while the right-wing party only has 13. While they are a coalition, they don't have the same power.

crististm 12y ago

"If you have to take an onerous deal against your people with your enemies, better die by their sword" - Stefan the Great

userulluipeste 12y ago
I agree with Ștefan (and with the lessons that history provides), but I have to disagree with the context in which this is put. We were talking about Europe here (well, the Eurozone part of it, which is nothing but a level of integration), where we talk about "us" on a broad (unional) level, about solving problems that we all have in our court. The next thing you know is a shift in prospective, where "us" got restricted on a national level (guess why and on who's interest), and now the rest of what was formerly "(the non-Greek part of European) us" you count as "enemies". Maybe we are more different than we wanted to admit, and we may have to work harder for what makes us "us (in an acceptable formula)", but we are not enemies.

Gatsky 12y ago

There is some degree of hostility towards Greece in this thread (albeit mostly from 2 people, one of whom joined HN 30 minutes ago). It seems appropriate to point out that it is public knowledge that the EU was/is irrationally hostile towards Greece during the Eurozone crisis.[0] Now they have to play high stakes fiscal politics with a very clever bunch of largely unrestrained leftists. Frankly, they can't blame anyone else for this problem. [0] http://www.telegraph.co.uk/finance/economics/11226828/Tim-Geithner-reveals-in-the-raw-how-Europes-leaders-tried-to-commit-financial-suicide.html http://www.telegraph.co.uk/finance/economics/11226828/Tim-Ge...

makeitsuckless 12y ago
"irrationally hostile" Yes, very "irrational", after discovering that Greece had blatantly lied about pretty much everything relevant to the Eurozone. Wars have been fought over a lot less.
- youngtaff 12y ago
  Yes, Greece isn't blameless but Let's not forget the Germany and France were the first to break the Euro's rules and the rule were changed so they weren't fined. http://www.bbc.co.uk/news/world-europe-16761087 http://www.bbc.co.uk/news/world-europe-16761087
- gawa 12y ago
  When you let anger and resentment dictate your policy, yes you're being irrational, by definition. It was like 7 years ago. Now there's a difficult situation (a debt realistically impossible to pay) and different people in charge (not thieves and Goldman Sachs anymore [1]). Let's focus on viable solutions. [1] http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html http://www.spiegel.de/international/europe/greek-debt-crisis...
- Gatsky 12y ago
  Don't get me wrong, the EU had every right to be angry, it's just preferable that the people in charge of billions of euros and the well being of millions don't pursue tacit vendettas in lieu of good fiscal policy, which is the point made in the referenced article.

davidw 12y ago

Odd. I don't see the same kinds of news - making it look like a Greek exit is imminent - elsewhere, like ft.com or wsj.com, who certainly cover this kind of thing.

TazeTSchnitzel 12y ago
The telegraph is right-wing and eurosceptic. Maybe they're trying to create panic.
- davidw 12y ago
  If it's a political article, it's probably best to just flag it, as per the guidelines.
ptaipale 12y ago
The subject has been around and progressing: http://www.wsj.com/articles/banks-ready-contingency-plans-in-case-of-greek-eurozone-exit-1420975504 http://www.wsj.com/articles/banks-ready-contingency-plans-in... http://www.nytimes.com/2015/03/19/business/international/warnings-raised-of-a-greek-exit-from-the-euro.html?_r=0 http://www.nytimes.com/2015/03/19/business/international/war... http://www.ft.com/cms/s/0/47aa4dce-d2f7-11e4-b7a8-00144feab7de.html http://www.ft.com/cms/s/0/47aa4dce-d2f7-11e4-b7a8-00144feab7...
- davidw 12y ago
  Sure, I've been following it pretty closely, as 1) it's interesting, and 2) I live in Italy, where we could potentially see some repercussions. However, this article - and especially the headline - make things sound quite imminent. It wouldn't be the first to mention capital controls or something else happening the weekend following this one, but they make it sound much more probable than others have.

lifeisstillgood 12y ago

We are already printing a trillion Euros in the current round of QE / stimulation. Why not make that 500 Bn more and use that imaginary money to release the economies of Greece Spain and Portugal. With the carrot of debt freedom, almost all economic and structural reforms become possible.

wfn 12y ago
Probably a matter of setting precedent vs. not setting precedent, etc.?
pjc50 12y ago
The political objective of the EU rightwing consensus is the opposite: use the debt as leverage to maintain political control.
xxxyy 12y ago
That would be only delaying the issue, as QE is a program of buying bonds with imaginary money, not giving out the imaginary money for free. Bonds have maturity dates. http://www.forbes.com/sites/robertlenzner/2013/11/25/the-fed-has-been-cornering-the-treasury-market-for-the-past-four-years/ http://www.forbes.com/sites/robertlenzner/2013/11/25/the-fed...
- lifeisstillgood 12y ago
  I'm not sure about that. Buying bonds is merely one of many mechanisms to stimulate demand in the assumption we are in a demand poor crisis. Demand in Greece is sooo depressed because of the enormous debt that relieving it at all will have a positive demand experience. Add to which Keynes original idea is to bury the money in bottles and any form of monetary supply increase is good. I think I agree with downthread - finances as a form of control - it's a banker mentality.

roymurdock 12y ago

It's going to be really interesting to see how far creditors are willing to go in order to get the money that Greece either (A) doesn't have or (B) is unwilling to pay. I think (A) is more applicable in Greece's case. The Euro has favored export economies, such as Germany's, for the past decade. Greece needs a currency that will support its economy, which is much different than Germany's. The Euro's benefits of easier inter-Europe trade and increased European power in the global currency markets have been far outweighed by its inability to cater to the very different economies of the various EU nations. It's important to look at who owns Greece's debt to see who is really pushing for repayment. [0] The EFSF owns 45% of the government's 315bn Euro debt. Amazingly, according to the EFSF's last financial statement in 2013: "As at [sic] 31 December 2013, the EFSF as an issuer has been assigned an AA rating by Standard & Poor's, an Aa1 rating by Moody's and an AA+ by Fitch Ratings and the highest possible short-term rating from all three major credit rating agencies — Standard and Poor's (A-1+); Moody's (P-1) and Fitch Ratings (F1+)." Germany, Italy, and France own the largest number of shares of the EFSF with Germany at 771k, France at 579k, and Italy at 509k. Most of the other countries own anywhere from 5k-100k shares. [1] I just wonder if people are going to get greedy/desperate enough to pull a vulture bank maneuver and start seizing real assets - see the seizure of an Argentinian Naval Vessel by hedge fund Elliot Capital. [2] Now that would be a very messy affair. [0] http://www.bloomberg.com/news/articles/2015-02-02/greece-seeks-third-debt-restructuring-who-s-on-the-hook- http://www.bloomberg.com/news/articles/2015-02-02/greece-see... [1] http://www.efsf.europa.eu/attachments/EFSF%20Financial%20Statements311213.pdf http://www.efsf.europa.eu/attachments/EFSF%20Financial%20Sta... [2] http://www.nytimes.com/2012/10/19/world/americas/seizure-of-argentine-ship-forces-shake-up.html http://www.nytimes.com/2012/10/19/world/americas/seizure-of-...

taliesinb 12y ago
> I just wonder if people are going to get greedy/desperate enough to pull a vulture bank maneuver and start seizing real assets - see the seizure of an Argentinian Naval Vessel by hedge fund Elliot Capital. [2] Now that would be a very messy affair. That would be basically be war, but fought with economic weapons. I like to think that Europe is not at that stage yet (and hopefully never will be).
twobits 12y ago

drapper 12y ago

I'm full of ambivalent feelings towards Syriza, on one hand they are (were) a nice breath of fresh air, a promise of some positive change, on the other: they turned out to be kinda arrogant, kinda short-sighted and pretty bad at diplomacy. Politics isn't about being right 100% of time (not that they were), it's about being effective, and in that they are lacking badly. Seems they entered this whole thing with this cocky approach of "now we'll show 'em, them dumb fucks!". They've got their wrists slapped for that and now complain again on how bad EU is treating them. Hard to get sympathy for that. Good article on this from Foreign Affairs: http://www.foreignaffairs.com/articles/143294/david-gordon-and-thomas-wright/syriza-stumbles http://www.foreignaffairs.com/articles/143294/david-gordon-a... Some quotes: "Yanis Varoufakis, the Greek Finance Minister, for one, singled out Italy for having debt that was “unsustainable,” which served only to infuriate Italian Finance Minister Pier Carlo Padoan" "Within a day of winning the Greek election, he (Tsipras) called the Russian ambassador and protested the EU’s statement condemning Russian-backed Ukrainian separatists for an attack on civilians in a Mariupol market" "But even then, Greece could have survived its mistakes were it not for one other fatal decision: to move forward with its electoral platform before renegotiating its debt, increasing government spending without the requisite funds and reversing or stalling key reforms (...) All these factors positioned Greece to buckle in its negotiations. It was simply hemorrhaging far too much money far too fast to hold its position."

icebraining 12y ago
Have you considered the apparent arrogance might be a strategy?
- cmdkeen 12y ago
  It's a really bad strategy in that it doesn't prepare the Greek people for anything bad happening. The short term consequences of Greece crashing out of the Euro is going to be very painful for Greece.
  - taliesinb 12y ago
    > The short term consequences of Greece crashing out of the Euro is going to be very painful for Greece. For Greece? Greece will recover, and it's hard to do worse than it is currently doing. And as others say, a floating currency will help correct the imbalance of an exporter like Germany dominating the EU. And bizarrely, I suspect investment will be quick to return if Greece is seen as being out from under its cloud. Investors seem to care less about previous behavior than about future prospects. > It's a really bad strategy in that it doesn't prepare the Greek people for anything bad happening. No... Germany stands to lose the most, because the likely eventual outcome is the collapse of the entire monetary union, and the wide markets that Germany has enjoyed.

holoto 12y ago

I applaud the Greek Government. They show how important a nationalistic point of view is (as in "Greece first"). For 70 years no German Government could win on a nationalistic ticket. The vast majority of German elites were pro-Europe. The majority of people saw the billions of $ wealth transfer to the southern and eastern countries as moral compensation for the war. With comparing the elected German chancellor to Hitler, comparing the finance minister to a concentration camp manager and the talk of reparations, Germans felt insulted and black mailed and Greece created cracks in the above narrative. The Greek government achieved that the next German government and generation of conservatives will win on a nationalistic ticket to fend of right wing anti European parties like the AfD (Alternative For Germany). Which is good, as the best for Germany is not a political union like the EU but TTIP and something like NAFTA combined with a China style currency policy. The EU helps small countries gain disproportional power and poor countries gain money transfers while it binds and hinders Germany and France. The US does what's best for the US for the last 200 years. A proud symbol to learn from. Next step could be the UK EU exit, FN in France will help, TTIP and with Polish NAFTA love this could be the first stepping stones for an unpolitical economic union.

userulluipeste 12y ago

Greece got in European Union too easy and this is the consequence. If Greece gets out, it would shake the faith in the E.U., true, but on the other hand that may be a good move for everyone. For E.U. in the way of not having more problems that it can handle and finally spending attention on things that are rather "not so important" right now. For Greece, it would be a much-needed "time alone", to get to truly understand the price and meaning of a few things. They seem to haven't had enough time for that.

euccastro 12y ago
The day after Greece gets out the EU will have more and bigger problems than the day before.
- jules 12y ago
  Though insignificant compared to the problems that Greece will have.
  - euccastro 12y ago
    Don't be so sure.
    - jules 12y ago
      Greece has a relatively small industrial sector and relies very heavily on imports, which will be completely unaffordable with a new currency. Their huge tourism sector will suffer when they go out of the EU. Their productivity per hour worked is very low. They still have a huge corruption and nepotism problem, an a people who will have to scale back their standard of living. Comparable to the trouble a country like Germany will be in when Greece leaves the Euro? I don't think so.
      - euccastro 12y ago
        I'm not disagreeing categorically, but I don't think it's that one-sided. I was (i) considering the cascading effect of a Greek exit from the Euro, and (ii) thinking in relative terms: I'm not arguing that Germany will be worse off, but perhaps it has more to lose at this point. Re: the cascading effect: http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and-why-the-efsfs-size-does-not-matter/ http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and... I'm aware that this article describes the dynamics of countries going to the receiving side of EFSF, not of countries leaving the Euro altogether, but I think the perverse dynamics described apply to the latter too. Relying heavily on exports, as Germany does, may mean you have more to lose in a crisis like this. Consider what happens after a few more European countries stop generating demand for German goods, at the same time that demand from the US is weak too. Demand from the rest of EU and from the US was a big part of what made Germany 'a country like Germany'. https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/ForeignTrade/TradingPartners/Current.html https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvir... Yes, imports would be unaffordable for Greece with the new currency and that will generate a lot of pain (not that devoting a big share of the national budget to servicing debt is helping a lot), but that will also force the country to correct that imbalance, making what's left of local industry more competitive. That pain would be a price to pay for adapting to a more self-reliant setup, while the one currently being endured (mostly on ideological grounds, I claim) seems more pointless. Re: tourism, having their own currency to devaluate might help with that. Re: standard of living, it's not like Greece's current situation, and their prospects within the demands of the memorandum are rosy either. Corruption and nepotism won't help, but they aren't helping within the Euro either. If anything, those problems are made worse in colonial economies, which the deficit countries in Europe have been, for good and ill, to a large extent. All in all, a Greek exit from the eurozone is a big lose-big lose proposition for anyone. I don't think it matters a whole lot who stands to lose more. But to the extent that it matters, I think it must be considered in relative terms. Overall, Germany has a better deal in the Eurozone than Greece, and it has more to lose.