Greek elections 2015’s version.

[Alarich]

Everything gets prepared for the currency conversion. I hope that as many as possible could withdraw their Euros.

I wonder how the Greek government will avoid massive inflation?

[Ser Scot A Ellison]

Alarich,

I think Greece wants Massive inflation so it can "inflate" its way out of debt. Regardless of how much that hurts the average Greek citizen.

[Commodore]

heh

https://twitter.com/tsipras_eu/status/615221564951429125

In the coming days, what's needed is patience and composure. The bank deposits of the Greek people are fully secure. #Greece

[Commodore]

Alarich,

I think Greece wants Massive inflation so it can "inflate" its way out of debt. Regardless of how much that hurts the average Greek citizen.

Inflation is a much easier means of confiscating wealth than taxation.

[SeanF]

Yeah the 1990s were fucking terrible in the ex communist countries. In fact on every economic metric the present time is WAY better for every country outside of the west and Japan.

Yeah I'm sure the government will decide on an official exchange rate and I'm equally sure that will be ignored. I think you're vastly underestimating the risk of a hyper inflationary shock when the Greek government leaves the Euro.

The Middle East and much of Africa seem pretty awful.

[mashiara]

Yes, banks won't open until Tuesday July 7th, if not later. I have to say I feel kind of shocked about it, I expected them to close for a couple of days, not a whole week. We were at a birthday party when this was announced, the mood was somber before but it got worse fast.

They haven't officially announced yet what the daily ATM withdrawal limit will be. Reports have it as low as 50/60euros (!) or as "high" as 100 or even 200. We'll find out, I guess. That is, if you can find an ATM with money. There's also the rather serious issue of several thousand elderly pensioners who don't have ATM cards and won't have any way of getting any money.

[Alarich]

Inflation will not make the Euro debt go away. But it will hurt all those who receive income in drachma. Basically the pensioners and workers that Syriza wanted to protect.

[dalThor]

I think you're vastly underestimating the risk of a hyper inflationary shock when the Greek government leaves the Euro.

Hardly. Most people in Greece may be multi-billionaires pretty soon.

Additionally, your concern for the average person living in Greece is heartwarming.

ETA: While most are closed on Sunday, lines were forming at the open gas stations.

[The Monkey]

Shouldn't there be an enormous surge in robberies and house break-ins now that the level of cash-on-hand is so huge among the people of Greece? Seems like a feast for the thieves...

[Shryke]

Alarich,

I think Greece wants Massive inflation so it can "inflate" its way out of debt. Regardless of how much that hurts the average Greek citizen.

Inflation hurts investors, not debtors.

That said, it's likely to be bad for the average greek too in the short term.

[A Horse Named Stranger]

Inflation hurts investors, not debtors.

That said, it's likely to be bad for the average greek too in the short term.

Partly true. Remember Greek companies won't be as "lucky" as the Greek state. They are in for a rough time. Imports will still need to be paid in hard coin (Euros). The Greek economy is not that strong to begin with, so the hopes inflation will make it easier to export is kinda hollow imo. What are they gonna export? Olive Oil? Some fruits? The Greek economy is highly dependant on imports.

Tsipras decided to deliberately crash negotiations and the people will pay the price for his follies.

He overplayed a very poor hand. If you want to play "a game of chicken" during negotiations, you'd better have some leverage. Tsipras and Varoufakis did not have that leverage. The Euro Zone will in all likelihood survive a Grexit, the EU won't fall apart neither. So what leverage did they have?

His rhetoric about being democratically elected to end that austerity and get a cut was probably nice for the pride at home. The problem with that, the creditors are elected officials too. And their electorate would not look kindly on forfeiting on those debts. So all the things he promised during his election were never going to happen. Not to mention all the other shenanigans. "We are checking if the debts are legal." So if you are going to conclude as a debtor, that your debts are illegal, does that mean you don't want to repay the money you borrowed? If that does not inspire confidence on the creditors site...

And no, that had very little to do with the EU punishing a left wing goverment, that had very much to do with Tsipras and Varoufakis doing their best to undermine any kind of trust in their reliability.

Same story with the referendum, the deadline for a deal was known for months, let's work out a deal. When a deal is near, make another turn and announce a referendum on the deal to take place a week after the deadline, and to top it off, recommend to your electorates "to vote no on that deal".

What did Tsipras expect would happen?

[Commodore]

Inflation hurts investors, not debtors.

That said, it's likely to be bad for the average greek too in the short term.

It only helps the debtors that receive the printed money. It's a wealth transfer from current savers of drachma to whomever gets the new drachma (the Greek government).

[Alarich]

I think that Tsipras overestimated two things:

- His economic leverage: basically, he said save us on our conditions or we'll drag you down with us. Yes, there is some potential leverage in the uncertainty of a Grexit, but only if you offer an alternative scenario of stability and reliable policies. Which he didn't.

-The political leverage: Russia doesn't bail out Greece, China doesn't, the US neither. Europe might, but there are conditions and you have explain to all these other European taxpayers why it makes sense for them to fund Greece. Try as you may to sell this as some sort of pan-European socialist idea/movement, but in the end people vote with their wallets. And even Greece, the bank run we're seeing isn't exactly a vote of confidence.

[Commodore]

Tsipras basically

[Biglose]

Partly true. Remember Greek companies won't be as "lucky" as the Greek state. They are in for a rough time. Imports will still need to be paid in hard coin (Euros). The Greek economy is not that strong to begin with, so the hopes inflation will make it easier to export is kinda hollow imo. What are they gonna export? Olive Oil? Some fruits? The Greek economy is highly dependant on imports.

Tsipras decided to deliberately crash negotiations and the people will pay the price for his follies.

He overplayed a very poor hand. If you want to play "a game of chicken" during negotiations, you'd better have some leverage. Tsipras and Varoufakis did not have that leverage. The Euro Zone will in all likelihood survive a Grexit, the EU won't fall apart neither. So what leverage did they have?

His rhetoric about being democratically elected to end that austerity and get a cut was probably nice for the pride at home. The problem with that, the creditors are elected officials too. And their electorate would not look kindly on forfeiting on those debts. So all the things he promised during his election were never going to happen. Not to mention all the other shenanigans. "We are checking if the debts are legal." So if you are going to conclude as a debtor, that your debts are illegal, does that mean you don't want to repay the money you borrowed? If that does not inspire confidence on the creditors site...

And no, that had very little to do with the EU punishing a left wing goverment, that had very much to do with Tsipras and Varoufakis doing their best to undermine any kind of trust in their reliability.

Same story with the referendum, the deadline for a deal was known for months, let's work out a deal. When a deal is near, make another turn and announce a referendum on the deal to take place a week after the deadline, and to top it off, recommend to your electorates "to vote no on that deal".

What did Tsipras expect would happen?

I think the main target was, that he wanted the IMF gone. The problem with those guys was, that they have to stick to their rules.

Really, it was looking like:

Lagarde: Our rules apply to everyone.

Varoufakis: But we are white.

Non-white world: *closely looking*

It is not like the IWF didn't give greece more "freedoms" than other countries. Lets be honest, any non-white country would have been kicked to the curve years ago.

And this was starting to cause a rift.

Now his next problem is the fact that the support for bailing out greece in the eurozone in general is at an all time low. And due to the legislation, even a few No can prevent a deal.

I can only guess, but I think he tries to get the fight into another arena. G7, Nato or something. Comments ala if you do not bail us out the US will, hint at that.

The problem with that is, that nobody trusts his coalition anymore.

It is a risky gamble he is pulling off, but there is the possibility to work. The major obstacle will probably be, that guys like Varoufakis suffered from severe foot in mouth syndrom during the entire negotiations.

I see the strategical interest and I understand that negotiating outside the framework of the EU offers a lot more freedoms, but if a lot of the EU countries would be severly angry at any backroom deal....(Why they and not us?)

[Galactus]

OK, my question is, even post-default, Greece is going to be more or less forced into an austerity policy, no? (with only shit-for-loans availible) That seems to be the patterns for most defaults I can think off. (including the swedish banking crisis in the early 90's, and the argentine thing)

[Loge]

OK, my question is, even post-default, Greece is going to be more or less forced into an austerity policy, no? (with only shit-for-loans availible) That seems to be the patterns for most defaults I can think off. (including the swedish banking crisis in the early 90's, and the argentine thing)

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.

[Biglose]

OK, my question is, even post-default, Greece is going to be more or less forced into an austerity policy, no? (with only shit-for-loans availible) That seems to be the patterns for most defaults I can think off. (including the swedish banking crisis in the early 90's, and the argentine thing)

In short: Yes. No matter if they introduce their own currency or whatever. Greece is import dependant. (Like nearly every europeen country)

Lets put it like that:

If you would now consider austerity then would be austerity.

[Biter]

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.

From what I've read, it sounds like the tourism industry is doing alright at the moment, so maybe it's a pretty cheap destination already.

[Hayyoth]

From what I've read, it sounds like the tourism industry is doing alright at the moment, so maybe it's a pretty cheap destination already.

If there's social chaos, including potentially the overthrow of the government by extremists, as a result of a hyper inflationary shock, then I doubt many tourists will be visiting at least for a while.

Greece should have entered default in 2009-10 when the debt was a fraction of what it is now. But that would have entailed a sudden need to balance the fiscal budget and folks didn't want that. Further the huge amounts owed by Greece to the western banking system was seen as highly destabilizing in the immediate aftermath of the Lehman collapse so the EU and the IMF were highly motivated to extend Greece tens of billions in new loans that they knew couldn't be re-paid. It's hard to feel much sympathy for either side in this fiasco, except to say the ordinary Greeks will suffer most. But then again they live in a democracy and they got the government(s) they deserved.