Greek Referendum Poll

[Admiral Yi]

I wonder if the EU might opt for a "Gremain" scenario, no matter how the results are. Donald Tusk's latest comment sounded a bit like that. Keep Greece in the Euro by increasing ELA so their banks don't collapse, but don't give any more loans to the Greek government. The Greek government would then probably have to use some kind of scrip to pay its obligations. That will be hugely unpopular and if they then make it legal tender, it was the Greek government that left the Euro not the EU that kicked them out.

The problem with this idea is if Greece doesn't get any fresh loans, they will have to default.  Then the Greek debt that Greek banks are holding will be worthless, which means a) their capital ratios are shredded, which means they need to be recapitalized by an infusion of cash, which Greece doesn't have and can't get and b) Greek banks will no longer be able to use those bonds as collateral for borrowing from the ECB. 

The best possible outcome for Greece would have been to ask for and get:

1. Serious debt write off.  Like maybe enough to get down to 70-80% of GDP.  So like a 67% haircut.

2. A fresh loan on top of that, enough to recapitalize Greek banks.  Structure the deal so that the lenders make some money if the banks return to profitability sooner than expected.  As a wild guess maybe that will mean 20% more debt/GDP on top of the written down debt.  So you start over at 100% of GDP.  Which is not much higher than the creditor nations.

3. Accept any and all austerity measures demanded by the troika.  No more fucking around.  The troika says hop on one foot with your thumb up your ass, that's what you do.

[garbon]

You're talking to me about the debt of Qc?  It has more than doubled under the filthy Liberals since 2003; it is now 274B and represents around 11B in yearly payments.  Remove it, and its attendant payments, and Qc suddenly finds itself in positive territory, with money to spare...  Oh look, who'd have thunk?!

G.

So if Quebec were to become independent, it would just going to absolve itself of an obligation to pay its debts?

[Zanza]

Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.

What issue the Eurozone currently has is resolved by that?

[jimmy olsen]

Strange

http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way--eu-euro-bailout-live

John Hooper, the Guardian's southern Europe editor, writes:

    First came Donald Tusk, the representative of the EU's member governments, who said that a 'No' vote was "not ... about beingin the euro zone or not". Then we had Wolfgang Schäuble telling the Greeks that the outcome of the referendum would merely decide whether their country kept the euro or would be "temporarily without it". And now, today, we get a member of the ECB's executive board, Benoît Cœuré appearing to say that, no matter which way the vote goes, "We will find the necessary instruments".

    Odd. No?

    All three gentlemen must surely understand that these remarks favour a 'No' vote. A lot of people those of us in the Guardian team here have spoken to in recent days have been in an agony of indecision: dare they vote for rejection of the terms if, as the 'Yes' camp has argued, it will in effect mean voting for Grexit? These comments will comfort and encourage them to put a cross by the OXI (Ochi).

    Is this about regime change? Are Greece's creditors trying to engineer the downfall of their tormentor, Alexis Tsipras? It seems unlikely: a 'Yes' vote would surely see him out of office much more swiftly.

    Or are they trying instead to create the conditions for Grexit? And reassure the Greeks that they will make it as painless as they possibly can?

[Martinus]

Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.

What issue the Eurozone currently has is resolved by that?

Germany has by far the largest and the most successful economy of the Eurozone - this alone is keeping Euro at an artificially high value, causing pain for pretty much everyone else, from Athens to Dublin and from Lisbon to Rome.

Eurozone without Germany would cause Euro to devalue to more reasonable levels, allowing Eurozone countries to become more competitive. It would also allow German mark to appreciate, lessening Germany's competitiveness, and thus restoring a more balanced foreign trade outputs across Eurozone.

Essentially, Germany in the middle of the Eurozone acts like a supermassive black hole for money.

[Monoriu]

Strange

http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way--eu-euro-bailout-live

John Hooper, the Guardian's southern Europe editor, writes:

    First came Donald Tusk, the representative of the EU's member governments, who said that a 'No' vote was "not ... about beingin the euro zone or not". Then we had Wolfgang Schäuble telling the Greeks that the outcome of the referendum would merely decide whether their country kept the euro or would be "temporarily without it". And now, today, we get a member of the ECB's executive board, Benoît Cœuré appearing to say that, no matter which way the vote goes, "We will find the necessary instruments".

    Odd. No?

    All three gentlemen must surely understand that these remarks favour a 'No' vote. A lot of people those of us in the Guardian team here have spoken to in recent days have been in an agony of indecision: dare they vote for rejection of the terms if, as the 'Yes' camp has argued, it will in effect mean voting for Grexit? These comments will comfort and encourage them to put a cross by the OXI (Ochi).

    Is this about regime change? Are Greece's creditors trying to engineer the downfall of their tormentor, Alexis Tsipras? It seems unlikely: a 'Yes' vote would surely see him out of office much more swiftly.

    Or are they trying instead to create the conditions for Grexit? And reassure the Greeks that they will make it as painless as they possibly can?

History has shown that outsiders trying to intervene in these referendums inevitably fail.  The more they tell the Greeks to vote yes, the more they will vote no.  It is human nature to be defiant to powerful outside forces.  So they give softer lines.  Nobody wants to be labelled "he was the one who said those words, sparked outrage in Greece, gave an extra percentage point to the no side, and murdered the Euro."

[Martinus]

3. Accept any and all austerity measures demanded by the troika.  No more fucking around.  The troika says hop on one foot with your thumb up your ass, that's what you do.

That won't happen. What's the point of this wishful thinking?

[Syt]

Poll on German satirical news site:

If you were Greek, how would you vote in the referendum?
- Σκύλλα
- Χάρυβδις

:odysseus:

[Iormlund]

 

[Zanza]

Germany has by far the largest and the most successful economy of the Eurozone - this alone is keeping Euro at an artificially high value, causing pain for pretty much everyone else, from Athens to Dublin and from Lisbon to Rome.

Eurozone without Germany would cause Euro to devalue to more reasonable levels, allowing Eurozone countries to become more competitive. It would also allow German mark to appreciate, lessening Germany's competitiveness, and thus restoring a more balanced foreign trade outputs across Eurozone.

Essentially, Germany in the middle of the Eurozone acts like a supermassive black hole for money.

How can Germany be a black hole for money when it has by far the biggest current account surplus in the world? That's the exact opposite of a black hole. It was German money that was fueling the asset bubbles across the Eurozone. If anything, you can complain that Germany spills out way too much money and should rather invest or consume at home.

In general, your talking point sounds like it was recycled from 2013 or so as by now Germany has balanced trade with the Eurozone and the Euro has lost massively in value over the last year. The Eurozone countries have also regained international competitiveness as can be seen in various trade balances.

[Monoriu]

Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.

What issue the Eurozone currently has is resolved by that?

Germany has by far the largest and the most successful economy of the Eurozone - this alone is keeping Euro at an artificially high value, causing pain for pretty much everyone else, from Athens to Dublin and from Lisbon to Rome.

Eurozone without Germany would cause Euro to devalue to more reasonable levels, allowing Eurozone countries to become more competitive. It would also allow German mark to appreciate, lessening Germany's competitiveness, and thus restoring a more balanced foreign trade outputs across Eurozone.

Essentially, Germany in the middle of the Eurozone acts like a supermassive black hole for money.

That's like saying Germany is the best pupil in the class.  Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad. 

[Iormlund]

That's like saying Germany is the best pupil in the class.  Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.

Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).

There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.

[Monoriu]

That's like saying Germany is the best pupil in the class.  Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.

Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).

There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.

Lots of other small, economically weak countries use the Euro.  I don't hear, say, Estonia having a problem.  I therefore think the problem lies with the Greeks.

[garbon]

Poll on German satirical news site:

If you were Greek, how would you vote in the referendum?
- Σκύλλα
- Χάρυβδις

:odysseus:

[Iormlund]

That's like saying Germany is the best pupil in the class.  Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.

Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).

There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.

Lots of other small, economically weak countries use the Euro.  I don't hear, say, Estonia having a problem.  I therefore think the problem lies with the Greeks.

The Greeks are to blame for many things, especially their dysfunctional economy.


But the Baltics, too, suffered badly at the start of the crisis. Though Estonia was able to recover pretty fast.

Like the other Balt governments, Estonian leaders decided to go the austerity route back when nobody was doing it. It worked for them mostly because they are so very tiny they could piggy-back on their much bigger neighbours, that were undertaking stimulus spending back then. For example, a sizeable portion of Estonia's exports at the time were produced in single Ericsson manufacturing plant.

Also, since they rejected responsibility for Soviet debt, they had little to start with. Private debt had grown fast, but it doesn't seem to have been transferred to the State, so maybe it was mostly a problem for foreign banks.

Despite this "successes", the Baltics are in a pretty bad demographic spot. Last time I checked, births declined about 20% when the crisis hit (about the same in Spain). Net migration of youngsters was massive for years. A significant portion of GDP comes from money sent home by them.