Just how much of a mess is Greece in, and what will happen?

[RegisterMe]

I laughed .

Slightly more seriously, here's an interesting piece in the WSJ yesterday.

Yes, Greece is in trouble, but yes, Europe is and has been complicit, and most other countries have cooked the books in similar ways, if to lesser extent.

[Lord Dakier]

Unless Alexander the great pops up to aid his Greek cousins I don't think they have much choice but to accept aid from EU and be forced into change. The people can resist as much as they want but should public order become too much of a problem they'll simply be removed from the EU.

[BeidAmmikon]

Yes, Greece is in trouble, but yes, Europe is and has been complicit, and most other countries have cooked the books in similar ways, if to lesser extent.

It seems so, and it just makes you wonder what good is the EU for anyway, since all the unified economic legislation imposed on all countries - designed to bring and maintain welfare for all eternity - has not been effective enough to protect the whole gathering from such major... trespasses. Now the body is affected, and what is to be done to heal it and prevent further and future afflictions?
And this ^ looking in retrospect, I should add - was it lack of vision, poor assessment procedures, poor planning, or what? And what else might be waiting in the shadows? And who will benefit from this global crisis? There are always war profiteers, there were communism profiteers as well (capitalism just comes with them in a bundle,) so why shouldn't be there crisis profiteers as well, these days?
They say, you just have to follow the money.

[BeidAmmikon]

I see that the spirits are getting increasingly incensed by the day. (AP, Bloomberg)
Another article (first result of this search) is pointing the finger while saying "speculative attack".

The millions of Greeks did not deserve this, whoever might be responsible. They should definitely calm down, find the culprits and put all that chain of corruption - if any, of course - to (quote 6th Amendment) a speedy and public trial (end quote), then revive their country faaaar away from the unnatural aggregate that the EU has become. And then, try and lead by example.
My feeling is that Greece could be the victim not only of corruption, but first and foremost of greed. Someone knew that something was going to happen there eventually, and they didn't say a word. I mean, it's as if no one noticed, or they noticed and were either bought out, or threatened, or they were just plain stupid. Therefore, Greece is dealing with a chain of corruption that has led to their economic destruction, a chain that has to be dismantled from the first link to the last one.
Well Greece, you should prepare that "speedy and public trial". The rest of the world is watching, you know. I don't want you to be given as example in some future manual for bankers and saboteurs of statal entities.
And, please, could you refrain from damaging your own cities in the process?
And could you please push for a global (of course, since "global" is all the rage these days) law on national sabotage and high treason, to defend/avenge countries against individuals/entities that destroy the economy of states, and therefore the citizens' livelihood? I mean, we have plenty of other global treaties, but nothing designed for this new, genocidal menace. You are among the first who suffer the consequences of these, so why remain silent?

[RegisterMe]

Still very grim news.

If Greece defaults, or goes to the IMF, the ramifications for Portugal, Italy (Ireland) and Spain are not good, and therefore not good for the Euro, and therefore not good for the EU (and the slightly wider Europe).

Hold onto your hats......

[BeidAmmikon]

Statement on the support to Greece by Euro area Members States

[RegisterMe]

With friends like these who needs enemies?

[Tsar_of_Cows]

*Devil's Advocate* Well why should we support them? Greece has brought it on itself by having a culture of government corruption and people failing to pay taxes. Why should we pay for their problems? The rest of Europe is already is shit, and the UK in particular has a deficit the size of Belgium.

[Lyth]

Greece are gonna be fine, they dipped into their pensions fund, sold their Gold reserve and are well on the road to recovery.

As was stated in the links, few corrupt politicians and some incompetant accountants are mainly to blame.

Compared to the UK's problems they have it easy, we're in the worst position but this seems to be kept out of the news alot.

I give the UK 5 years to solve it's financial problems with a year to fix it's infrastructure before national power/water shortages screw us over. Both at once will knock us back to a 3rd world economy.

The UK's best analysts estimate 4 years to half our debt, Greece can wipe thir slate clean in 2 years.

[Dragoongfa]

*Devil's Advocate* Well why should we support them? Greece has brought it on itself by having a culture of government corruption and people failing to pay taxes. Why should we pay for their problems? The rest of Europe is already is shit, and the UK in particular has a deficit the size of Belgium.

There is also the fact that some of our 'allies' decided that bribing some particular politicians was far better from exposing them.

@Lyth

I knew that I would end up retiring at 80 but I didn't know that we still had a gold reserve, didn't someone take it 70 years back?

[RegisterMe]

Greece are gonna be fine, they dipped into their pensions fund, sold their Gold reserve and are well on the road to recovery.

You'll be buying Greek sovereign debt then? Yielding 13% for ten year bonds it's incredibly cheap at the moment, and you obviously think that there is no chance of default.

No, I thought not .

[BeidAmmikon]

Greek officials Wednesday morning banned the practice of short selling
Who will pay for this mess, of almost continental proportions now? I hope - and want - that whoever they are, they are going to pay dearly for sabotaging and destroying entire nations. Eventually, it will happen.

[Lyth]

Dragoonfa,

I think I probably got my dates back to front and the pension & gold deal is part of the IMF solution yet to be agreed upon. Working till 80 join the club.

2009 Gold Reserves
http://en.wikipedia.org/wiki/Gold_reserve

Registerme,

You understand these matters better than I do am sure but there are only 2 choices.

1. Help Greece wipe the debt and have a strong Euro again in 2 years.
2. Don't and watch the Euro collapse.

---

Still think Greece is just fine compared to the UK. Do I think we should have too pay? def' not but this was the whole point of the Euro wasn't it?

[RegisterMe]

Registerme,

You understand these matters better than I do am sure but there are only 2 choices.

1. Help Greece wipe the debt and have a strong Euro again in 2 years.
2. Don't and watch the Euro collapse.

---

Still think Greece is just fine compared to the UK. Do I think we should have too pay? def' not but this was the whole point of the Euro wasn't it?

I've just reread my opening post, it wasn't that bad a forecast. Unfortunately I think it is actually worse than I laid out. If you look at your two options above (not picking on you Lyth, doing it because they are interesting talking points):-

1. I'm not sure that it can happen now. Compared to my opening post the figures have all turned out to be worse than expected. The other thing I was wrong about was the IMF's involvement.

The problem is that there has been so much equivocation on the part of Germany (which I did predict) that I'm not sure there's an option other than default - don't forget that the $45 odd billion they are talking about extending to Greece only covers the rolling over of this year's debt. It will likely take another $60+ billion over the next two to three years, and that's assuming that the country manages to bring in horifically painful reforms.

Who is going to stump up the cash? Neither Europe nor the IMF have bottomless pockets (I'll come back to this later). Essentially Europe said "don't worry, we'll back them" to get the markets to ease off. The markets replied "we don't believe you".

2. So what can happen? One of three things. Either Greece will default (which will stick European banks with $50-100 billion in losses, which will mean more government bailouts for the banks), or Greece will drop out of the Euro (which there is no mechanism for), or both.

None of the above are pretty.

Regardless, attention will then turn to the next weakest member in the pack, Portugal. And then Ireland or Italy. And then the UK.

And you know what?

Europe and the IMF do not have the resources to provide a backstop to the above.

It will stop eventually. But it is going to be very, very painful. I would not be surprised to see at least another one of my list of countries above default, and wouldn't be surprised to see them drop out of the Euro as well. One thing in the UK's favour is that at least it can devalue Sterling.

The Euro was always a political project that papered over economic cracks with much talk of solidarity and fraternity. This is becoming all too apparent, it will be interesting to see how much denial various EU bodies and stakeholders go in for.

Sorry to be such a doom and gloom merchant, but this is how I see it .

[BeidAmmikon]

Enter Spain.
How will the unfortunate countries be saved? By printing the necessary money, or what?

[RegisterMe]

Yep, forgot Spain, shouldn't have .

[Tsar_of_Cows]

Greece are gonna be fine, they dipped into their pensions fund, sold their Gold reserve and are well on the road to recovery.

As was stated in the links, few corrupt politicians and some incompetant accountants are mainly to blame.

Compared to the UK's problems they have it easy, we're in the worst position but this seems to be kept out of the news alot.

I give the UK 5 years to solve it's financial problems with a year to fix it's infrastructure before national power/water shortages screw us over. Both at once will knock us back to a 3rd world economy.

The UK's best analysts estimate 4 years to half our debt, Greece can wipe thir slate clean in 2 years.

As far as the numbers go, Greece is in the proverbial a lot worse than the UK is.

AFAIK, Greece's deficit and debt is a lot larger than the UK's, and the UK is worth a lot more than Greece in terms of GDP and pretty much everything else. Even after the financial crisis, the UK is still a G8 country, Greece isn't.

The UK has a good chance of paying it's debts and sorting out it's deficit sometime in the next 5-10 years, as far as my non-economically trained brain can figure out, whereas Greece is going to have problems for a lot longer than that. We're talking state bankruptcy, and yes the UK has it bad, but not that bad.

[Lyth]

I'll try to keep this short; Nothing new on my view of Greece and expanding on why I feel the UK is in a worse position - little off topic, just answering directs.

I'm not an economist as you all well know but I do consider my sources better than "Dave" from da pub.

It's my understanding that despite German protests the deal will be going ahead and Greece's Gold reserve and Pension funds are going under the hammer to pay for most of it's debt which the IMF greenlighted. I can't argue with your logic regarding the 3 possible outcomes or the GDP issue and whilst I may be looking at this far too optimisticly I still hope and believe an accord is reachable.

However if this is the case then I still see Greece as being in a much better position than us. We are still borrowing more than we are paying back and if we lose our current credit rating that number wil sky rocket, we have no pension fund or gold reserve to offer as candy, Germany have been after our financial institutions for decades and unlike Greece we'll be looking at takeovers because we have something the rest of europe will want. We're only being kept afloat by our credit rating and low interest payments.

I mentioned the infrastructure issue earlier because it's something I know alot about and all the politicians are sidelining at the moment, the UK has built millions of new homes and other buildings and plugged them straight into existing utilities built in the 50's/60's that weren't designed to handle this much pressure. The cost of rectifying this problem is phenomenal but if it isn't done we're gonna a very bad time without clean water or power and our economy will take a hit that will make Greece's problems look quaint.

We can't even afford/organise/manage to cover up potholes in our roads at the moment. Imagine what a few days of no power or clean water would do to us or how long it would take to clean the polluted pipes or damaged phase 3 patches.

Greece are in their position due to incompetance of command just like we are so we must help them if we are to expect any help ourselves when the time comes, maybe a protection deal or the like for our own enterprises if defaulting is the only viable option for us.

I completely agree with what you said Registerme regarding the Euro as a political excercise but it's in motion now and the sterling hasn't been in as weak a position in my entire life, if we devalue it even more wouldn't it be better to just take the Euro instead?

<p.s. Tsar and I disagreeing again, All is right with the world. >

[Tsar_of_Cows]

Don't get me started on the bloody potholes... I have to weave the Tsarmobile all over the road not to damage it

You might be right on the infrastructure, I know our internet is 2nd world by comparison to some places.

Things are going to get rough in the near future that's for certain.

[RegisterMe]

True. Not as rough as in Greece mind. And for all its faults, which are becoming increasingly evident, Greece just has the misfortune to be the lightening rod for "the EU".

Don't get me wrong, I am not fundamentally anti-EU, anti-Euro, or anti-anythingelseeuroflavoured. I just have never believed that the rhetoric has come anywhere close to the reality.

And now it is beginning to bite.

I'll come back to Lyth's comments tomorrow when I am sober .