Greece shocks markets with referendum on austerity

[Neil]

Grallon?

No.  It's just some generic Nazi asshole.

[Sheilbh]

Just saw a British banker discussing Greece in general.  He said that he didn't believe they could restructure their economy, which they need to, because their economy's contracted by about 16% since the start of this crisis and the pace of contraction is increasing (I think he said from -5.5% last quarter to -7% this quarter, both annualised). 

It just made me wonder what can the Greeks do?  If the economy's in such a crisis that there can't be any effective economic restructuring what else is there to do?  I think they need normal IMF procedures (which I think were put off to save Euro-banks elsewhere) and should default, within the Euro, plus shock therapy economic reform.  But would even that work when they're in an economic collapse like this?

[alfred russel]

Just saw a British banker discussing Greece in general.  He said that he didn't believe they could restructure their economy, which they need to, because their economy's contracted by about 16% since the start of this crisis and the pace of contraction is increasing (I think he said from -5.5% last quarter to -7% this quarter, both annualised). 

It just made me wonder what can the Greeks do?  If the economy's in such a crisis that there can't be any effective economic restructuring what else is there to do?  I think they need normal IMF procedures (which I think were put off to save Euro-banks elsewhere) and should default, within the Euro, plus shock therapy economic reform.  But would even that work when they're in an economic collapse like this?

They can only devalue if they leave the euro. The basic plan of "voluntary" reductions of debt by private institutions was an effective default anyway.

[Razgovory]

So is Greece fucked?

[Sheilbh]

So is Greece fucked?

Even assuming they continue on their huge austerity program, and there's 50% haircut, and there's continued support from the EFSF, ECB and IMF then they'll get debt down to 120% of GDP by 2020.  If there's a global economic recovery.

[KRonn]

So Greece is efectively screwed, with no good options, mainly bad or worse options. And it remains to be seen the fall out around the world. They'll maybe take down financial sectors of other national economies around the world, slamming some fragile economies. What a mess.

[Sheilbh]

So Greece is efectively screwed, with no good options, mainly bad or worse options. And it remains to be seen the fall out around the world. They'll maybe take down financial sectors of other national economies around the world, slamming some fragile economies. What a mess.

I just read this on Paul Mason's blog at the BBC.  I think it sums up how bad things are for the Greeks:

But if Greece votes no - and goes for euro-exit - there are several plans in the process of being published that explain what you have to do. Close the banks for days, ration food and energy, institute strict capital controls - with most probably a few fast patrol boats at Glyfada harbour to check every departing yacht for cash and bonds.

Later, you get massive devaluation, with inflation; your non-sovereign debts become instantly doubled so you cannot pay them (i.e., the stock of Greek private debt to external lenders, for example, or, intra-corporate debts).

Finally, you get the chance to become competitive again. (I base this on SOAS professor Costas Lapavitsas' upcoming document, which he has verbally outlined to me).

http://www.bbc.co.uk/news/business-15539350

Edit: Incidentally what amount of Greek debt is now owned by government bodies?  Surely the majorities been bought by the ECB, IMF and EFSF by now?

[Capetan Mihali]

Good for the Greeks.  When "austerity" = squeezing the working class even further, it's worthless.  This is not 1942 Britain austerity, it is "austerity" precipitated by elite finance and reinforced by tired racist morality tropes about hardworking Protestants and lazy Mediterraneans.  Greece has always been a colonized nation, from the Ottomans to their degrading Danish monarchy to a brutal civil war 10 years after the Spanish to a US/NATO-backed dictatorship within recent memory that must have all but destroyed any faith of the citizenry in the virtues of the same neoliberalism that produced this very crisis.

[Tamas]

Good for the Greeks.  When "austerity" = squeezing the working class even further, it's worthless.  This is not 1942 Britain austerity, it is "austerity" precipitated by elite finance and reinforced by tired racist morality tropes about hardworking Protestants and lazy Mediterraneans.  Greece has always been a colonized nation, from the Ottomans to their degrading Danish monarchy to a brutal civil war 10 years after the Spanish to a US/NATO-backed dictatorship within recent memory that must have all but destroyed any faith of the citizenry in the virtues of the same neoliberalism that produced this very crisis.

neoliberalism? Ever-rising number and salaries of the greek public sector, for the last 30 years? The medieval guild systems enacted in most trades? In general, the rampant overspending, given extra fuel by the cheap loans the euro gave to the government. Come on.

[Martinus]

Now the referendum is back on.

That thing opposite of Nika.

That thing is called "back to normal" in Greece.

But seriously. Fucking Greeks. Them and Icelanders are the biggest scum in Europe.

[Martinus]

Just saw a British banker discussing Greece in general.  He said that he didn't believe they could restructure their economy, which they need to, because their economy's contracted by about 16% since the start of this crisis and the pace of contraction is increasing (I think he said from -5.5% last quarter to -7% this quarter, both annualised). 

It just made me wonder what can the Greeks do?  If the economy's in such a crisis that there can't be any effective economic restructuring what else is there to do?  I think they need normal IMF procedures (which I think were put off to save Euro-banks elsewhere) and should default, within the Euro, plus shock therapy economic reform.  But would even that work when they're in an economic collapse like this?

The problem is that there is no majority consensus there for shock therapy economic reform. These things worked in countries like Poland, because the majority was convinced this was necessary and just grit their teeth. Now, Greeks are protesting and a lot of leftist luminaries, like Zizek, are telling Greeks they are right.

This is a classic problem with sovereign debts - sovereigns cannot be really forced to repay them if they don't want to.

[Martinus]

Good for the Greeks.  When "austerity" = squeezing the working class even further, it's worthless.  This is not 1942 Britain austerity, it is "austerity" precipitated by elite finance and reinforced by tired racist morality tropes about hardworking Protestants and lazy Mediterraneans.  Greece has always been a colonized nation, from the Ottomans to their degrading Danish monarchy to a brutal civil war 10 years after the Spanish to a US/NATO-backed dictatorship within recent memory that must have all but destroyed any faith of the citizenry in the virtues of the same neoliberalism that produced this very crisis.

See? That's what I meant.

[Crazy_Ivan80]

Good for the Greeks.  When "austerity" = squeezing the working class even further, it's worthless.  This is not 1942 Britain austerity, it is "austerity" precipitated by elite finance and reinforced by tired racist morality tropes about hardworking Protestants and lazy Mediterraneans.  Greece has always been a colonized nation, from the Ottomans to their degrading Danish monarchy to a brutal civil war 10 years after the Spanish to a US/NATO-backed dictatorship within recent memory that must have all but destroyed any faith of the citizenry in the virtues of the same neoliberalism that produced this very crisis.

neoliberalism? Ever-rising number and salaries of the greek public sector, for the last 30 years? The medieval guild systems enacted in most trades? In general, the rampant overspending, given extra fuel by the cheap loans the euro gave to the government. Come on.

indeed, very little liberalism present there. It's probably one of the most "socialist"-corporatist states in europe

[Martinus]

Good for the Greeks.  When "austerity" = squeezing the working class even further, it's worthless.  This is not 1942 Britain austerity, it is "austerity" precipitated by elite finance and reinforced by tired racist morality tropes about hardworking Protestants and lazy Mediterraneans.  Greece has always been a colonized nation, from the Ottomans to their degrading Danish monarchy to a brutal civil war 10 years after the Spanish to a US/NATO-backed dictatorship within recent memory that must have all but destroyed any faith of the citizenry in the virtues of the same neoliberalism that produced this very crisis.

neoliberalism? Ever-rising number and salaries of the greek public sector, for the last 30 years? The medieval guild systems enacted in most trades? In general, the rampant overspending, given extra fuel by the cheap loans the euro gave to the government. Come on.

Neoliberalism is the today's economic left's word for "bad". It is used against anything they don't like. It's like "fascism" in politics - a completely devalued and misused word.

[Martinus]

In all of this, the thing that pisses me off the most are voices from some leftist quarters in Europe, saying that this should be a subject of a referendum, because this is what "democracy is all about". Really?

So why don't you hold a referendum on death penalty. Or whether we should keep or kick out immigrants from Africa and Middle East. And then let's see what results the direct democracy produces (incidentally, an average voter probably is able to form a more informed opinion about either of these measures than about whether the bail out deal is good for Greece).