Germany backs down over Greece bailout

[Thanas]

So the private investory will not be forced to take any losses at all.

Link

I guess one nation cannot stand against the whole of Europe after all.

George Papandreou, the Greek prime minister, will visit Luxembourg on Monday for talks with EU leaders who are anxious that the entire rescue scenario could still unravel because of his inability to deliver on a radical privatisation programme, spending cuts, and tax increases.

Yeah, I am sure he has got really big incentives now that the money is already guaranteed. Also, seeing as how this fuel even more resentment against Merkel and Greece in Germany, I fully expect more eurosceptics to win and Greece being hated even more now.

[mr friendly guy]

I am not sure if this has been asked before, but is there any way for Greece to leave the Eurozone (+/- leaving the EU as well) either voluntarily or forced? And if it can, what will happen to the Eurozone and Greece if it has its own currency back with the ability to devalue it?

[Thanas]

To the eurozone? Not much, except if the markets spin it as "Germany is just as bad as Greece" or some other bs.
As for Greece, leaving won't do much seeing as how the debts they have are already scripted in Euro, so leaving and instituting their own currency again is not going to change that. So they will default then anyway, seeing as how nobody will give them a good exchange rate considering they do not make any stuff, tourism will crater (guess who liked going to Greece? Germans. Guess who does not like Greece much currently? Germans) and nobody will have any faith in their state being able to fix itself except by printing money.

[K. A. Pital]

seeing as how nobody will give them a good exchange rate considering they do not make any stuff

They had a large oceangoing Navy. Perhaps they should return to the productive roots of the industrial economy.

[Pelranius]

seeing as how nobody will give them a good exchange rate considering they do not make any stuff

They had a large oceangoing Navy. Perhaps they should return to the productive roots of the industrial economy.

Don't you mean a merchant marine, Stas?

[K. A. Pital]

seeing as how nobody will give them a good exchange rate considering they do not make any stuff

They had a large oceangoing Navy. Perhaps they should return to the productive roots of the industrial economy.

Don't you mean a merchant marine, Stas?

Duh. I'm stupid today. Yes, I do.

[evilsoup]

Heh, the Greeks finally did what I thought they should have done from the start, and held a gun to the global economy's head.

[Thanas]

Heh, the Greeks finally did what I thought they should have done from the start, and held a gun to the global economy's head.

The statement is hilarious only in its ignorance. Greece did nothing, the IMF did everything.

seeing as how nobody will give them a good exchange rate considering they do not make any stuff

They had a large oceangoing Navy. Perhaps they should return to the productive roots of the industrial economy.

That statement also does not make any sense, seeing as how that market is pretty much cornered already, Greece has no natural resources to speak of and also not the talent pool to build a high-tech industry. I'd love for them to produce things, but right now, they cannot.


Good article on the reactions in the press

[K. A. Pital]

I'd love for them to produce things, but right now, they cannot.

They still need to start making things. Unless they start, their government just puts them deeper into shit. There won't be a way out of this. Present-day imbalances have been consciously foistered and grown in an atmosphere of financial euphoria and believe in all-powerful markets. Either you remove them or you don't. Keeping the present structure of the Greek economy won't work anyway. They are bankrupt, as are Portugal, Ireland and Spain - asking for multibillion assistance means you're insolvent. Rectification will take years. Without any serious reform to the economy of Europe, though, the crisis will repeat, and much sooner than many expect. I would say that by 2020, another collapse will follow. More severe than this one, too.

[evilsoup]

Not neccesarily - if Europe becomes more like a super-state, then regions like Greece could become like the north of England; a net draw on resources, with somewhat lower living conditions, but will not cause massive problems. But that's not very likely or desirable.

[Fingolfin_Noldor]

So how much longer before Merkel loses the national election?

[Thanas]

So how much longer before Merkel loses the national election?

If she continues like this the opposition might win by not doing anything.

[cosmicalstorm]

Would it be correct to say that Greece will fail anyway and this is simply an action that will delay that event by 6-36 months?

Also, will this decision make the ultimate collapse, if it happens, even more disastrous for everyone involved?

[Thanas]

Assuming there will not be sweeping changes in a nation that has a reputation for being backwards, utterly corrupt and not really interested in reform, yes.

[Teebs]

Would it be correct to say that Greece will fail anyway and this is simply an action that will delay that event by 6-36 months?

Also, will this decision make the ultimate collapse, if it happens, even more disastrous for everyone involved?

Greece will default, I would be amazed if they avoid it regardless of reforms put through. I hope that the bailouts are at least partly being made with the aim of allowing those exposed to Greece to shield themselves more in the intervening time. I can't see any other good reason because everyone knows they are going to default.

My big hope is that a Greek default doesn't take Portugal and Ireland with it. They're in a much stronger position and could actually get through the crisis on bailouts (their debt as a percentage of GDP is lower, their bond yields [i.e. borrowing prices] are lower than Greece's and they seem to be much more willing to reform).

[Narkis]

There used to be industry here. Textiles were booming until a decade ago, for example. And then they got outsourced to Bulgaria or other neighbouring countries with much cheaper labour costs.

Shipping is still a major source of income and employment. Ship owners are among the most influential tycoons in Greece, if not the most influential. Unfortunately, competition, lack of innovation, and derelict ships are a hindrance to the industry.

And a default looks certain on my end. I just hope it'll get delayed for a year, so that I can get my degree and get the fuck out of here.

[Chirios]

I am not sure if this has been asked before, but is there any way for Greece to leave the Eurozone (+/- leaving the EU as well) either voluntarily or forced? And if it can, what will happen to the Eurozone and Greece if it has its own currency back with the ability to devalue it?

Yes, per the Treaty on the Functioning of the European Union a country can be booted out of the EU if it's found that they broke EU rules.

[Thanas]

I am not sure if this has been asked before, but is there any way for Greece to leave the Eurozone (+/- leaving the EU as well) either voluntarily or forced? And if it can, what will happen to the Eurozone and Greece if it has its own currency back with the ability to devalue it?

Yes, per the Treaty on the Functioning of the European Union a country can be booted out of the EU if it's found that they broke EU rules.

It is however unclear if that applies retroactively. International law would suggest no.

[Sea Skimmer]

It is however unclear if that applies retroactively. International law would suggest no.

Worst comes to worst the EU can just vote a new set of laws to kick them out. Or just ignore the law anyway, which is how this crisis got going in the first place by everyone ignoring the debt limits. International law matters exactly as much as nation states care about it at the moment.

As far as I can see the plan right now is to just try to keep pushing default down the road as far as possible to everyone else has a chance to recover economically first; which is not all and all a bad strategy but hardly a good one either.

[Norseman]

Big Norwegian economy honcho just gave an interview where he suggested that the only reason the EU is bailing Greece out now is that Spain, Portugal, Italy and Ireland are also in trouble right now. If they keep Greece afloat a few more years then the Greek situation can't draw everyone else down with them. However he doesn't think that this is a long term solution, or that Greece will be able to service their debt over time. So basically the EU is buying time and trying to limit the damage.

[wautd]

So the private investory will not be forced to take any losses at all.

Bastards. So the banks, who caused the crisis to begin with, where allowed to survive thanks to the infusion of billions by the governments (and thus taxpayers money). But when they're asked in turn to help bailing out a country in order to avoids its bankrupcy? Hah! Money grabbing thugs, the lot of 'em.

I am not sure if this has been asked before, but is there any way for Greece to leave the Eurozone (+/- leaving the EU as well) either voluntarily or forced? And if it can, what will happen to the Eurozone and Greece if it has its own currency back with the ability to devalue it?

Yes, per the Treaty on the Functioning of the European Union a country can be booted out of the EU if it's found that they broke EU rules.

Rumours have it that Greece never should have been allowed in to Eurozone to begin with, as some (all?) EU ministers already know that Greece's economic figures were fraudelent.

[Narkis]

Rumours have it that Greece never should have been allowed in to Eurozone to begin with, as some (all?) EU ministers already know that Greece's economic figures were fraudelent.

I thought it was common knowledge and not just rumours that the figures used to get admittance were bullcrap. I'm not even sure the current figures are accurate, and they suck.

[Teebs]

Yeah, I am sure he has got really big incentives now that the money is already guaranteed. Also, seeing as how this fuel even more resentment against Merkel and Greece in Germany, I fully expect more eurosceptics to win and Greece being hated even more now.

Well it looks like the money is still conditional, so that's probably a plus.

[Purple]

Not neccesarily - if Europe becomes more like a super-state, then regions like Greece could become like the north of England; a net draw on resources, with somewhat lower living conditions, but will not cause massive problems. But that's not very likely or desirable.

Not likely I can see, but why not desirable? Presumably an European super state would be a good thing.

[Sea Skimmer]

Not likely I can see, but why not desirable? Presumably an European super state would be a good thing.

Because the people involved don't agree on a long list of key issues of sovereignty. See Libya for a current example. If you had an EU super state then either a shitload of nations would be dragged into a war they don't want, likely breaking up the state, or the EU would have blocked involvement and Qaddafi would be basking on a pile of corpses and another successful suppression of dissident. The EU has already gone too far too fast for its own good. Going further would solve some problems, but its not at all realistic at the moment.