Greek elections 2015’s version.

[Ser Lepus]

The problem is getting the greek economy to a state when it can start borrowing again under decent rates. The problem is that the greek government has so little trust that it's very difficult to actually acquire the money it needs to reform. (and with good reason, the greek government at one point didn't even know how many employees it had)

The fact that they are very openly trying to not pay the interests doesn't help...why is going anybody to lend them money? You don't lend money if you know you won't ever be paid.

Even if they claim that they will pay when their economy rises, creditors are human beings, and not being paid for 20, 30 or 40 years is the same that never being paid for a 40-60 years person who has bought Greek bonds. Even banks and governments have shareholders and voters that will get angry if they learn their money has been invested in a debt that won't be repaid for decades.

Greece could maybe arrange to receive some kind of help that isn't a loan and won't be returned, EU has given funds to agriculture and development that were non-repayable grants, like the European Regional Development Fund (ERDF), but that wouldn't be enough, Greece would still have to borrow money, and its very public intention of not repaying its debts seriously hurts its chances of getting loans.

The Greek government has crippled itself when it has announced that it wouldn't repay its debts.

[Shryke]

The fact that they are very openly trying to not pay the interests doesn't help...why is going anybody to lend them money? You don't lend money if you know you won't ever be paid.

Even if they claim that they will pay when their economy rises, creditors are human beings, and not being paid for 20, 30 or 40 years is the same that never being paid for a 40-60 years person who has bought Greek bonds. Even banks and governments have shareholders and voters that will get angry if they learn their money has been invested in a debt that won't be repaid for decades.

Greece could maybe arrange to receive some kind of help that isn't a loan and won't be returned, EU has given funds to agriculture and development that were non-repayable grants, like the European Regional Development Fund (ERDF), but that wouldn't be enough, Greece would still have to borrow money, and its very public intention of not repaying its debts seriously hurts its chances of getting loans.

The Greek government has crippled itself when it has announced that it wouldn't repay its debts.

That doesn't make sense. The Greek government can't pay it's debts. Saying they won't is just acknowledging the obvious.

[Ser Scot A Ellison]

Shryke,

Why would anyone willingly lend to someone or some entity that openly states it cannot pay its existing debts, or the interest on those existing debts?

[Shryke]

Shryke,

Why would anyone willingly lend to someone or some entity that openly states it cannot pay its existing debts, or the interest on those existing debts?

What does this question have to do with anything?

[Ser Scot A Ellison]

Shryke,

That's what Galactus and Ser Lupin were discussing.

[Born Yesterday]

History is full of defaults, and yet every single country that has defaulted in the past still manages to borrow. Why?

For the same reason anyone lends anyone - other than political reasons, which also happens occasionally. Because creditors expect to make a buck out of it. Either directly, by getting back their principle and interest later (future prospects are always more important than past behavior). Or by speculating (selling the debt at a profit at an opportune time, or insuring it via credit default swaps, or bundling it with other kinds of debt and selling the bundle, or a million other ways).

[Shryke]

Shryke,

That's what Galactus and Ser Lupin were discussing.

But that question is not relevant to what I said. There's tons of reasons you loan to risky prospects, even at rates that don't reflect that risk.

But I was pointing out that Greece is saying it won't pay back it's debts cause it can't and everybody knows it.

[Ser Lepus]

That doesn't make sense. The Greek government can't pay it's debts. Saying they won't is just acknowledging the obvious.

The Greek government CAN pay the interest. They have been doing it until now. It may take them 50 or 70 years to pay the debt itself, but that doesn't matter. Loans to countries aren't really expected to be returned; people buy them for the interest.

If you have money that you are not going to spend right now, and you don't want to invest it in stock actions for fear to losing money, you buy bonds that give you a small but safe interest. And the safest bonds aren those that countries sell, because it is assumed that any country will make whatever it takes to pay its debts.

So you buy Greek bonds. You receive a small fixed percentage of your initial investment so long as you keep the bonds. When you need to recover your money, you don't go to Greece and demand your money back, you sell the bonds in the stock market, and somebody who want a safe place to put his or her money buys them.

Greece isn't expected to return the debt for decades, only the interest.

Problem is, if Greece says that it won't pay the interest, nobody has reason to buy their bonds, so the people who have them can't sell them and recover their money. And from that point onwards, Greek bonds are worth zero, nothing.

What is more, all the countries that already have bought Greek bought lose the money, because they can't hope to sell Greek debt anymore.

Even if Greece says that they will pay 20 or 40 years in the future, that doesn't matter, because most people don't want to wait 30 years to get their money back.

And the problem is, Greece needs to keep borrowing money in order to keep the country running. All countries, even rich ones, borrow money all the time, it works so long as they are able to pay the interest. But if Greece doesn't pay the interest, nobody buys their debt, and they can't ask for more loans anymore.

[The Marquis de Leech]

The problem is getting the greek economy to a state when it can start borrowing again under decent rates. The problem is that the greek government has so little trust that it's very difficult to actually acquire the money it needs to reform. (and with good reason, the greek government at one point didn't even know how many employees it had)

Destroying the Greek economy (which is what austerity does) makes it harder (actually impossible) for Greece to pay back the debt. That's why leaving the Euro and devaluation are the solution - they offer the ability for Greece to find its feet, rather than being perpetual debtors in the Euro system.

[Ser Scot A Ellison]

RBPL,

Are Greece's foreign creditors obligated to accept payment of debt's incurred in Euro's in the recreated Drachma?

[Ser Lepus]

Destroying the Greek economy (which is what austerity does) makes it harder (actually impossible) for Greece to pay back the debt. That's why leaving the Euro and devaluation are the solution - they offer the ability for Greece to find its feet, rather than being perpetual debtors in the Euro system.

Problem is, right now Greece gets more money from loans that it pays from interest, so it will get less money once they declare bankrupcy, stop paying the debt and leave the Euro (because they won't get more loans) and won't be able to get any more money from anywhere.

Doctors, teachers, policemen, garbage collectors, pensioners...etc., won't get their wages and pensions. The economy will go worse instead of better.

[The Marquis de Leech]

Problem is, right now Greece gets more money from loans that it pays from interest, so it will get less money once they declare bankrupcy, stop paying the debt and leave the Euro (because they won't get more loans) and won't be able to get any more money from anywhere.

Doctors, teachers, policemen, garbage collectors, pensioners...etc., won't get their wages and pensions. The economy will go worse instead of better.

Not true. Greece is currently running a primary surplus (before interest payments), enforced via Euro diktat at 4.5%. It's been pointed out that if the EU were willing to accept a primary surplus of 1.5%, Greece would make a significant dent in its unemployment figures. A default and Grexit means they don't have to run a surplus at all, though a balanced budget is probably advisable in the circumstances (they can print money to cover costs with their own currency, but that's a whole other can of worms).

[The Marquis de Leech]

RBPL,

Are Greece's foreign creditors obligated to accept payment of debt's incurred in Euro's in the recreated Drachma?

They're obligated to accept what Greece gives them. It's a default.

[Ser Scot A Ellison]

RBPL,

Why are they obligated to accept what is presented if Greece defaults?

[The Marquis de Leech]

RBPL,

Why are they obligated to accept what is presented if Greece defaults?

Because they're not allowed to invade?

[Ser Scot A Ellison]

RBPL,

Can't pressure be placed by simply refusing to lend Greece more money until its preexisting debts are paid? No invasion necessary.

[The Marquis de Leech]

RBPL,

Can't pressure be placed by simply refusing to lend Greece more money until its preexisting debts are paid? No invasion necessasy.

Of course. Default means that while Greece can wipe the slate clean, it can't borrow for the foreseeable future. But, short of invasion, Greece is under no obligation to pay the money back.

[Biglose]

The issue is that with Greece leaving the Euro, investers will also not be likely to give money or risk their money there. (Unless they are made a really great offer)

The main issue of Zypras in general was and probably is, that they did not know the field they would be playing on.

I mean the idea that it is politically possible to order people with avarage 300 Euro pensions to pay for a 600 Euro pension + benefits for somebody else is just silly.

Add to that the smug way the people involved...

The ugly truth is that a grexit would be bad for europe. Giving in to Zypras would be the destruction of europe. And zypras had an elemental part in making this become reality.

How: Generally speaking by ignoring the facts on the ground. And facts always win. The longer the struggle the worse the outcome.

Austerity has less to do with greece and much more to do with the rest of europe. It is something the EU needs to show to the eastern european countries. If she would not, there could really be a problematic devide. And despide what Obama might have said, it is quite obvious where the US would stand at the end. Every job germany does for the US in europe finnland could do to. And lets be honest about it, espacially concerning russia, Finnland would be much more reliable than Germany (or france, or Spain or any other western european country!).

And there is the real issue. It is a struggle between the once who want to keep Greece in the Euro and EU even if it means having to pay for them (Germany is the biggest power there) and the other part (mostly nord/east who kind of would not mind letting them go, most influencial country there would be Finnland). While Germany might have power and influence on her side, they have reality. And to change reality is much harder than to change power dynamics. (Let the Afd have some good elections in Germany and the german government will have to fold)

[Galactus]

That doesn't make sense. The Greek government can't pay it's debts. Saying they won't is just acknowledging the obvious.

There's a different between saying you can't pay your debts and saying you won't pay the interest on your debts. From a purely cynical POV most countries don't expect to pay off thier debts: Everyone knows this, but you're still expected to keep up with interest payments. (at least to some extent)

[Arakan]

You know all this talk about Grexit, debts, loans and so on is actually just left pocket, right pocket.

The real issue with Greece is almost always kept under the carpet. Greece is a massively disfunctioning economy/country. Yes, corruption is a problem but this is a problem in many developing countries who nevertheless show growth.

No, I see two major problems:

1) an economy and society which is not only not innovative but which discourages innovation

2) a complete lack of solidarity within the Greek society. Those who have the money and could have helped to push Greece into a better future, shit on their fellow Greeks and brought their money to Switzerland or London.

These are the facts. Maybe just maybe people in Greece should stop bashing those Nazi Germans and start to rebuild their society from the scratch. Of course this is not mandatory but the consequence will be that the average standard of living will decrease to an appropriate level (based on economic and innovative strength) which will be similar to countries like Guatemala, Cambodia or Namibia.

Face the truth, my fellow Greek friends: Greece is absolutely not prepared for the dog fight competition which is the globalized economy of the 21st century.