4 ms·

> Do you think that if Greece had defaulted on those loans they would have been better off today? Yes. > Are you aware that that situation would have meant MU

by sgift 12y ago

> Do you think that if Greece had defaulted on those loans they would have been better off today? Yes. > Are you aware that that situation would have meant MUCH bigger cuts to public spending than those requested from the so called Troika? No, I am not, that's because this scenario is nothing but fear-mongering without any base in reality. It is always put up when an alternative to the current course is discussed but is nothing but hot air. If you are "aware" that your scenario would have happened provide a proof.

danmaz74 12y ago
It's not fear-mongering, it's just looking at historical precedents (eg Argentina). Do you think you can just default, and then everybody will do business with you as usual? Do you think that Greek bonds were only in stupid French and German banks, or that they were the main investment of Greek banks - which would have all defaulted, leaving Greek people and businesses without any money, and forcing the government to leave the Euro (as to be able to start printing money). There is no mathematical proof for what I'm saying, but even the economists who suggested that Greece should have defaulted and left the euro were saying (I would say they were aware) that things would have become much worse before they became better. That is as certain an economic forecast as one can be - the point some economists were/are making is that in the long run Greece will come out better from a fresh start with a default and outside the euro, with a devalued Dracma that would make Greeks poorer but more competitive internationally. But there is no guarantee that Greece would actually recover from an event like that and come back to the first world - especially if it alienates the whole EU in the process.
- peterfirefly 12y ago
  A default would not just lower the Greek wages down to where they ought to be. It would also de facto quickly lead to massive deregulation, reductions in the number of people working for the state, subsidies for political cronies, etc. It might also break various political stalemates. All those factors will help Greece rebuild but it is a very unpleasant way of reforming a country that has had an urgent need for reforms for decades. Unpleasant as in: people will die. A smarter country with better voters would grab the chance it has been given to do those reforms in a slower and more orderly fashion and say "Thank You!" to the IMF and the EU. And then spend the next 30 years apologizing :)
derriz 12y ago
So after default, where would the money have come from to pay teachers and police salaries, pensions, public services, etc? And how would the country import oil, medicine, technology, etc? Even if current Greek debt was wiped out overnight, the government would still need loans just to pay day-to-day bills. It's hard to tell how much since lying about government spending is a Greek institution (for example, they've "revised" the 2009 deficit number 3/4 times since then) but conservatively a few billion a month would be required even if they had no debt. The unfairly vilified troika not only gave Greece the money to pay off all their loans at very reasonable rates but also promised to continue to lend money to give Greece some time to sort out their primary deficit (deficit without interest payments). No Syriza is telling the rest of the EU that they will reverse the moves to fix the primary deficit but that the EU must continue to pay for it.
- ptaipale 12y ago
  And Greece actually sorted out that primary deficit for a moment, in second half of 2013. Then, in 2014, the election campaigning started again.

by sgift 12y ago

danmaz74 12y ago

It's not fear-mongering, it's just looking at historical precedents (eg Argentina). Do you think you can just default, and then everybody will do business with you as usual? Do you think that Greek bonds were only in stupid French and German banks, or that they were the main investment of Greek banks - which would have all defaulted, leaving Greek people and businesses without any money, and forcing the government to leave the Euro (as to be able to start printing money). There is no mathematical proof for what I'm saying, but even the economists who suggested that Greece should have defaulted and left the euro were saying (I would say they were aware) that things would have become much worse before they became better. That is as certain an economic forecast as one can be - the point some economists were/are making is that in the long run Greece will come out better from a fresh start with a default and outside the euro, with a devalued Dracma that would make Greeks poorer but more competitive internationally. But there is no guarantee that Greece would actually recover from an event like that and come back to the first world - especially if it alienates the whole EU in the process.

peterfirefly 12y ago
A default would not just lower the Greek wages down to where they ought to be. It would also de facto quickly lead to massive deregulation, reductions in the number of people working for the state, subsidies for political cronies, etc. It might also break various political stalemates. All those factors will help Greece rebuild but it is a very unpleasant way of reforming a country that has had an urgent need for reforms for decades. Unpleasant as in: people will die. A smarter country with better voters would grab the chance it has been given to do those reforms in a slower and more orderly fashion and say "Thank You!" to the IMF and the EU. And then spend the next 30 years apologizing :)

derriz 12y ago

So after default, where would the money have come from to pay teachers and police salaries, pensions, public services, etc? And how would the country import oil, medicine, technology, etc? Even if current Greek debt was wiped out overnight, the government would still need loans just to pay day-to-day bills. It's hard to tell how much since lying about government spending is a Greek institution (for example, they've "revised" the 2009 deficit number 3/4 times since then) but conservatively a few billion a month would be required even if they had no debt. The unfairly vilified troika not only gave Greece the money to pay off all their loans at very reasonable rates but also promised to continue to lend money to give Greece some time to sort out their primary deficit (deficit without interest payments). No Syriza is telling the rest of the EU that they will reverse the moves to fix the primary deficit but that the EU must continue to pay for it.

ptaipale 12y ago
And Greece actually sorted out that primary deficit for a moment, in second half of 2013. Then, in 2014, the election campaigning started again.