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If they don't want to change anything, at the same time, have no access to "money", then what? Does the EU just keep pumping money in for humanitarian aid anyways? If they are going to be on humanitarian aid anyways, why not let them do it on a currency that they can control to help them get off it? This entire thing about how Greece would be on life support if they switched away from the euro doesn't make sense, they would be in no better shape while being on the euro if they don't make any changes. If Greece stays on the euro and it still cost 10 euro for a bread, or 40 drachma, does it matter if they can't afford it with either currency?
It's not a matter of "allowing" them to switch to a new currency. If the current/former program doesn't get prolonged, Greece will have to introduce a new currency. Otherwise, they'd simply run out of new Euros. With Drachmas - or whatever they come up with - they could just print new money on their own.
The consequences? Inflation. Their beloved pensions and savings would soon be reduced to zero. Also, their debts would still be in Euros.
O c'mon, you are a very smart fellow, you already know the answer to that question.
Quote:
Originally Posted by viribusunitis
It's not a matter of "allowing" them to switch to a new currency. If the current/former program doesn't get prolonged, Greece will have to introduce a new currency. Otherwise, they'd simply run out of new Euros. With Drachmas - or whatever they come up with - they could just print new money on their own.
The consequences? Inflation. Their beloved pensions and savings would soon be reduced to zero. Also, their debts would still be in Euros.
Mostly agree, except the last two parts.
If they default on euro-denominated debt owed to "official" creditors, then they would have no more euro-denominated debt owed to "official" creditors, unless France and Germany decide to invade or, slightly less brutally, refuse humanitarian assistance (food, fuel, medicine) in a transition period. If Germany and France refuse, then Greece could conceivably receive humanitarian assistance from other sources, perhaps Russia and the United States (yes, they can still work together on some issues), perhaps even Turkey and Italy (the Italian olive crop sucks this year).
If there is a more or less smooth transition, then within a year or two Greece could probably generate enough of its own food supply and foreign exchange from tourism and maybe a few traded goods and services to at least survive, so their beloved pensions will at least be worth a meal or two a day, not zero.
But, yes, if an abrupt transition with no humanitarian aid, then zero for something like 2/3 of the population within several weeks.
But before that, there is still a probability of a deal.
O c'mon, you are a very smart fellow, you already know the answer to that question.
Well, Poland has said that it will not adopt the Euro until 2020 at the earliest, it doesn't fullfill the criteria, it's not in the ERM II phase, and only 44% of the population wants to join.
Therefore saying that Poland will join "soon", is quite exaggerated.
I am impressed, the Greeks seem to be the only European people left that has a backbone
I think the result was an ideological one. Money vs people.
I find it funny that the Spanish pm has such a big mouth, judging Greece, when his country was treated very differently, just because it is much bigger. There is a general trend in Europe that the smaller the country, the more the big ones try to bully it. The whole EU is an undemocratic cancer and the Greeks said no to that.
The Greeks also said no to what their finance minister rightly called terrorism, EU politicians were trying to scare the Greeks into saying yes, interfering in an internal Greek referendum.
The Greeks are certainly aware that they need to get their financial act together. They know that as well as anyone else. They just reject the failed measures of the finance fascists of the IMF, EU bodies and certain European national capitals.
I don't think it would make sense to return to the old currency, it would be too small and weak, a ping pong ball for investors. They could do a long-term transition by pegging a new currency to a big one for some time until the dust has settled, debt has been restructured, etc.
They might even adopt the Chinese currency, by Chinese standards the Greek debt is peanuts so that whole mess would not really have an impact on the Chinese currency.
No back to Drachma because they have a very large Euro-denominated currency, so if they decide to revert to a very cheap Drachma their debt would multiply by ten.
They go back to the drachma.. or gov 'scrip', because they won't have any more 'bailout euros', that's why.
And the nominal debt would multiply by ten (in new Drachma) but then multiply by ZERO, as in total repudiation.
And imports, like meat, medicine, et Al, will be prohibitively expensive. And life will get even harder.
If the EU troika agrees to massive debt write-offs for the Greeks then Ireland, Spain, AND Italy will want a similar deal, as they are current on debt repayments and will scream 'Us too!'.
If it were only piddling Greece the problem would be much simpler.
But it is not and the citizens of financially stronger countries are, likewise, at their breaking point as well.
For the short run I think the EU will let them hang and twist in the wind until the reality sinks in that Greece has no Euros to be 'on' except those they receive from others.
P.S. The idea of using Renminbi is clever, but then some rich Chinese would probably buy all the islands as a vacation resort for them and a few million of their closest friends. Yeah, that would work.
I am impressed, the Greeks seem to be the only European people left that has a backbone
I think the result was an ideological one. Money vs people.
Well, Greece is already on the verge of a humanitarian catastrophe, and the OXI result brings them even further to the edge.
I think the no-result on the contrary says that the Greeks have absolutely no backbone. "We messed up for decades, but we won't suffer the consequences. Stupid Germany and France are only bullying us, but please give us more money."
Countries have gone broke before, repeatedly, mine for instance about half a dozen times or so. Why should it not happen anymore? I never got that...
Argentina is not doing that bad it seems, and if it weren't for the vulture funds, they would be doing even better.
Going broke means starting anew, settling problems in ways not possible as long as everyone is trying to prevent the inevitable.
I remember some time ago Africa's debt was partly forgiven, why not do that within the EU? It would help several countries, not just Greece.
Well, Greece is already on the verge of a humanitarian catastrophe, and the OXI result brings them even further to the edge.
I think the no-result on the contrary says that the Greeks have absolutely no backbone. "We messed up for decades, but we won't suffer the consequences. Stupid Germany and France are only bullying us, but please give us more money."
There are various ways the Greek government could earn a few billions fast, no idea why they don't. But that doesn't mean austerity is the solution. Wealthy Greeks have up to 200 billion euros on Swiss accounts. most of it illegally, If I were the Greek government I would work with the Swiss police and get my share of it.
Who is "we"? Most Greeks did not mess up. Just like the majority of Portuguese, Spaniards, etc. never lived above their means. So naturally they wonder why they should pay the bill...
The Germans have still not paid back what they owe Greece dating back to WWII happenings, which amounts to many billions by now.
Well, Poland has said that it will not adopt the Euro until 2020 at the earliest, it doesn't fullfill the criteria, it's not in the ERM II phase, and only 44% of the population wants to join.
Quite interesting. Apparently, then, the Poles have a lot more sense and self-honesty than the Portuguese, Italians and Greeks who also should have stayed out of the euro for 10, 20, even 40 years.
I agree with Neuling that the French and Germans were absolute fools, or sinister, for lending the Greeks so much money. And that there are a lot of innocent people (yes, they did vote for corrupt politicians, but how much choice did they really have?) who are suffering the vices of others.
So may both borrowers and lenders deal with the consequences, to more or less extent.
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