Greece II or: How I learned to stop worrying and love the euro.

[dalThor]

Interesting [url=http://www.theguardian.com/world/2015/jun/28/the-greeks-for-whom-all-the-talk-means-nothing-because-they-have-nothing article from The Guardian as to why, for so many Greeks, this whole mess has little bearing.

After seven years of a crisis that has left 26% of Greece’s workforce unemployed, 30% of its people below the poverty line, 17% unable to meet their daily food needs and 3.1 million without health insurance, it is hard to see how anything decided in Brussels or in Athens in the coming week will do much to change the lives of a large number of Greeks any time soon.

“I do not see how any of it will change our lives. I have no hope, anyway,” said Georgios, sitting in a scavenged plastic garden chair beneath a parasol liberated from a skip.

“So many people – ordinary, low-to-middle income people with jobs and homes and their lives on track – have seen their lives go drown the drain so fast,” Pertsinidou said. “People who never dreamed that one day they would not be able to pay their electricity bill, or feed their children properly.”

“Those that were already on the margins have been pushed right to the very, very edge, and those who were in the middle have been pushed to the margins,” said Ioanna Pertsinidou of Praksis, a charity that runs day centres for vulnerable people and offers legal and employment advice.

I'm not in any way absolving the Greek side of culpability, there's plenty to go around.

I tried to hyperlink the article above, here's the link: http://www.theguardian.com/world/2015/jun/28/the-greeks-for-whom-all-the-talk-means-nothing-because-they-have-nothing

[The Marquis de Leech]

Previous Greek thread: http://asoiaf.westeros.org/index.php/topic/123797-greek-elections-2015s-version/

We're almost certainly about to see the first sovereign default in a European country in the 21st Century (the first outside the former Eastern Bloc since Greece's own in 1932-1964). What will it mean?

Well, for Greece it will almost certainly mean the end of the Euro and the return of the drachma. If you're going to the extent of defaulting, you might as well extract some advantages - in this case, a return to having control of its own monetary policy. No country need ever default on debt denominated in its own currency, so ironically this default makes future ones less likely. Not that Greece will be able to borrow more any time soon, of course, but if necessary it can print more drachmas as required.

The return of the drachma will certainly mean imported products spike in price. This means fuel shortages, and probably rationing. There will also be the significant hassle of commercial contracts having to be re-calculated. Alternatively, those products Greece does export will be super-cheap, and there is no longer any need for the Government to run big primary surpluses (Greece is currently being forced to run 4.5% budget surpluses by its creditors). With no opportunity to borrow, and import inflation already an issue, Greece will probably have to run a balanced budget, so it won't be a case of milk and honey, even with less enforced austerity. Spending can really only start to be lifted when Greece's newfound export competitiveness starts to make a difference to Government revenues.

As for the rest of the world? Well, the Euro's just taken a massive (deserved) hit in credibility, and it will be interesting to see what happens in Portugal, Italy, and Spain. One of the great unknowns, of course, is the effect a Greek default will have on the international financial system. I suppose we're about to find out.

[dalThor]

Er, http://asoiaf.westeros.org/index.php/topic/132199-greece-ii-or-how-i-learned-to-stop-worrying-and-love-the-euro/ ?

[The Marquis de Leech]

Er, http://asoiaf.westeros.org/index.php/topic/132199-greece-ii-or-how-i-learned-to-stop-worrying-and-love-the-euro/ ?

Sorry. You posted that while I was still typing. Thread merging time?

[dalThor]

I figured as much, no offense. :)

[Ser Scot A Ellison]

Loge,

Only if they stay in the Euro. That's why they need to create their own currency. Then they can just print the money. The downside for Greek consumers is that the currency will tank and prices for imported goods go through the roof. Good for the tourism industry, though, because the country becomes a cheap destination.

Did Zimbabwe and Serbia become big tourist destinations during their, relatively, recent bouts with hyperinflation? If that happens while it would make Greece a cheap place to visit prices could rise so quickly that your newly converted Drachmas are worthless the day after you arrive. Not the most convient way to travel.

[Lyanna Stark]

Seems there are finally articles appearing about how a Greek default would be worrying and destabilising, instead of just reporting super-dry stuff about the IMF. (Talking domestic media now.) They're even discussing the possibility of a coup, it seems.

The narrative is still from the Swedish side to blame the Greeks almost completely though. Strangely perhaps UK press seems far more able to see both sides, even though the UK is traditionally more wary of the EU/EMU. Or perhaps that is indeed why they are capable of seeing things as not only good/bad side.

Loge,


Did Zimbabwe and Serbia become big tourist destinations during their, relatively, recent bouts with hyperinflation? If that happens while it would make Greece a cheap place to visit prices could rise so quickly that your newly converted Drachmas are worthless the day after you arrive. Not the most convient way to travel.

Depends. Sweden had hyperinflation in, I think, 1989 during the banking crisis, but it did not turn it overnight into a major tourist destination. Greece already is a major tourist destination though, and is competing with countries like Spain, Turkey, Croatia and the recently badly hit Tunisia.

However, if a. you can buy things with Visa/MasterCard, I imagine it will be less of a problem how much the drachma price is set as? (Given that the banking system isn't in complete collapse). I rarely get any local currency when I go somewhere. In fact, it was a very long time ago. I generally only pay by card or use the local ATM if cash is for some reason absolutely necessary. Or b. I suppose the tried old method of paying in dollars and/or euros could work. I'd also hazard a guess and say that Greece is less unstable than Zimbabwe by quite a margin so isn't really comparable.

[Loge]

Loge,

Did Zimbabwe and Serbia become big tourist destinations during their, relatively, recent bouts with hyperinflation? If that happens while it would make Greece a cheap place to visit prices could rise so quickly that your newly converted Drachmas are worthless the day after you arrive. Not the most convient way to travel.

Nobody talks of hyperinflation. The expectation is that the drachma would lose about half its value. And Greece already is and always has been a big tourist destination, but these days they stiff competition from the likes of Turkey. A weaker currency would make them more competitive. Of course that has to be weighed against the impact of higher import prices. There's a reason why they wanted to join the Euro so badly.

[Biglose]

Previous Greek thread: http://asoiaf.westeros.org/index.php/topic/123797-greek-elections-2015s-version/

We're almost certainly about to see the first sovereign default in a European country in the 21st Century (the first outside the former Eastern Bloc since Greece's own in 1932-1964). What will it mean?

Well, maybe some ultra shady undemocratic deal between merkel and obama, cutting out the say of most of the eurozone because geostratigical interests and stuff.

Thats one of the few option I can still see. By now, without the IMF I just can't see how this could pass all the national parliaments it would need to pass.

[Ser Scot A Ellison]

Loge,

That's a very optimistic assessment. Plan for the worst bit hope for the best. Do you really think hyperinflation isn't possible in Greece after it drops the Euro?

[Lyanna Stark]

Nobody talks of hyperinflation. The expectation is that the drachma would lose about half its value. And Greece already is and always has been a big tourist destination, but these days they stiff competition from the likes of Turkey. A weaker currency would make them more competitive. Of course that has to be weighed against the impact of higher import prices. There's a reason why they wanted to join the Euro so badly.

If the monetary issues can be solved, I imagine Greece might take a chunk out of what was previously Tunisia's market since tourists are unlikely to want to go there for a while. I already heard people discuss whether this will spread to Turkey as well (i.e. worry about terrorism in muslim countries).

[Isis]

I have wondered for years now why people have wished to continue going on cheap package holidays to Turkey. So I doubt people will stop now. I guess some people love cheap holidays more than anything else.

[Hayyoth]

Nobody talks of hyperinflation. The expectation is that the drachma would lose about half its value. And Greece already is and always has been a big tourist destination, but these days they stiff competition from the likes of Turkey. A weaker currency would make them more competitive. Of course that has to be weighed against the impact of higher import prices. There's a reason why they wanted to join the Euro so badly.

Why is no one talking about it? A defaulting Greece seems ripe for it. Hyperinflation is as much a problem caused by mass psychology/panic than monetary policy. A new Drachma is issued, the middle class don't trust the left wing gov to maintain it's value, suspecting they'll print to pay for pensions and welfare. They hoard hard currency and refuse to accept the official exchange rate. The velocity of the new currency increases as folk try to constantly spend it as quickly as possible or exchange it for Euros, an inflationary spiral sets in. It seems very likely that a hyperinflation will take hold of a defaulting Greece which is why I suspect the Greek middle class are so keen to stay in the Euro.

[JoeyBanana]

I know little about the stock market but worst day since 2011 is bad, yes?

[Arataniello]

Joey, a single day's drop in the stock market is neither here nor there, except in the very very small number of cases (someone who has to liquidate their portfolio today for some reason, for example).

A one day drop in the market should be irrelevant. It's a series of such drops in quick succession ("a market correction") that is bad.

[Commodore]

Hyperinflation is as much a problem caused by mass psychology/panic than monetary policy.

Depends how you define inflation. If it means increasing (inflating) the money supply, that's just monetary policy. If it means rising prices, that encompasses much more.

[Hereward]

Depends. Sweden had hyperinflation in, I think, 1989 during the banking crisis, but it did not turn it overnight into a major tourist destination. Greece already is a major tourist destination though, and is competing with countries like Spain, Turkey, Croatia and the recently badly hit Tunisia.

No, Sweden has never experienced hyperinflation. Hyperinflation is generally considered to be inflation of over 50% a month. Sweden hit just over 12% a year in that banking crisis. That may be why it didn't become a tourist mecca. That and the weather. And moose.

[Lyanna Stark]

No, Sweden has never experienced hyperinflation. Hyperinflation is generally considered to be inflation of over 50% a month. Sweden hit just over 12% a year in that banking crisis. That may be why it didn't become a tourist mecca. That and the weather. And moose.

You are right, we had a marginal interest rate of 500% for a short while though, which was pretty interesting. The weather is definitely not a plus, but the Germans really appreciate the moose I'll have you know.

The Swedish Transport Agency had problems for a number of years with German tourists stealing moose warning signs. :crying:

[Ser Scot A Ellison]

I like moose. At a distance.

[dalThor]

Seems there are finally articles appearing about how a Greek default would be worrying and destabilising, instead of just reporting super-dry stuff about the IMF. (Talking domestic media now.) They're even discussing the possibility of a coup, it seems.

A coup? I've been reading quite a bit lately and haven't seen anything mention that yet. Hopefully it won't come to that.

I'm still undecided what I might do were I able to vote in the referendum. I didn't hear the entirety of Junker's statement today but it sounded pretty condescending. I wish I knew the truth to the matter whether or not at the 11th hour the Eurogroup decided to add further pension cuts to the nearly approved deal.

On the one hand, relative economic stability is a tempting prospect. On the other hand that 'stability' comes at a cost that seems too high seeing that, in my opinion, the terms the prior two negotiating governments capitulated to haven't produced much in the way of positive results - unless we consider the profits made by the lenders in the endless revolving door of debt payments.

In too many ways for many people, it boils down to a choice between starving on one's own terms or starving under the terms of the lenders.

And yes, moose. I want to see me some moose. Maybe we'll be able to apply for refugee status? :P