Greece - My opinion

[Georgesoros]

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They took the loans and used it to party. Now everyone is paying and the political class keeps promising miracles. Unfortunately everyone will pay thru higher rates and a decrease in services. I understand Greeks have a lax tax enforcement, so everyone eats from govt. Public money is spent as the polical class wishes, so public infrastructure is decaying while the political class swims in luxury.

[Omollo]

They took the loans and used it to party. Now everyone is paying and the political class keeps promising miracles. Unfortunately everyone will pay thru higher rates and a decrease in services. I understand Greeks have a lax tax enforcement, so everyone eats from govt. Public money is spent as the polical class wishes, so public infrastructure is decaying while the political class swims in luxury.

PP

I never thought I was a sadist. But when I recall what African countries had to go through and their problems derisively dismissed in a manner suggesting Africans are not intelligent and are doomed to fail, I want to see how they will explain Greece.

If Greece goes, next is Spain, Portugal and Cyprus. Italy is not out of the woods yet.

I however like the way the Greek government has refused to play ball. They know just how much the EU wants them to stay inside the Euro zone and they are changing goalposts every minute. They ask for something when it is given they ask for more.

They have no put the question to referendum to the chagrin of the EU. They can't oppose a referendum without saying they are against democracy and they can't support it either. So Greece has put the EU states where nobody has before. The mandarins want it done quick, the rest of the EU politicians are enjoying the discomfiture of the EU mandarins.

I think the IMF is getting off easily despite it being the main culprit that prescribed poison.

Aint I glad China got her Infrastructure online yesterday! The IMF and WB will now face some serious competition. Unless they start behaving themselves, they might sit and wait for borrowers and none will appear!

[Georgesoros]

Nobody is going to lend money to someone who has in the past failed to pay. So they have to look for someone who is willing to take risks. These sharks usually charge a premium because they know you are their last resort. Even if the Chinese exchange opens it will be the same. They will take a higher risk at a cost.

[RV Pundit]

Greece are screwed either way. I would recommend they listen to their lenders and take the bitter pill. Defaulting is easy but who will ever lend you money again.

[Georgesoros]

Greece are screwed either way. I would recommend they listen to their lenders and take the bitter pill. Defaulting is easy but who will ever lend you money again.

Yes defaulting doesnt take much, but the consequences will be far reaching and ridden with pain. Future generations will feel it. If they think Chinese will lend them money they are thinking wrong. Chinese are very savvy people. They smile while emptying your pockets. Ethics is not one of their motto.

[Omollo]

Greece are screwed either way. I would recommend they listen to their lenders and take the bitter pill. Defaulting is easy but who will ever lend you money again.

Pundit

They are negotiating. All that drama is for the guy on the street to consume

[Georgesoros]

They defaulted.
Now it becomes more expensive to pay or even borrow.

Greece are screwed either way. I would recommend they listen to their lenders and take the bitter pill. Defaulting is easy but who will ever lend you money again.

Pundit

They are negotiating. All that drama is for the guy on the street to consume

[Kim Jong-Un's Pajama Pants]

What in this world do the Greeks make?  Do they have anything apart from olives and tourism?

[RV Pundit]

That is big question. I think they got done by Olympics. They had to spend alot to build empty monument.

What in this world do the Greeks make?  Do they have anything apart from olives and tourism?

[RV Pundit]

They are the new argentina...maybe they will be fine after all.

They defaulted.
Now it becomes more expensive to pay or even borrow.

[RV Pundit]

Very enlightening article. Greece are not entirely to blame. The Euro was.
http://www.vox.com/2015/6/29/8862583/greek-financial-crisis-explained

[Omollo]

The key word is Contagion. The EU is scared of contagion. If Greece succumbs and falls out of the Euro, the speculators will move on to Italy, then take Spain and Portugal in one swoop before roasting Ireland.

Thus the EU will bend over backwards to be shagged by Greece.

They are the new argentina...maybe they will be fine after all.

They defaulted.
Now it becomes more expensive to pay or even borrow.

[gout]

when I watched the Zeitgest there was a question which I am never yet to get an answer about who owes what if the whole world is in debt ..how can we have more debt than assests we have around.....

[Omollo]

The Greek debt has made some few guys very wealthy. I hear one lives in the Cayman Islands. You can be sure Somali Bonds are locked up somewhere accruing interest. They must going for a dollar for 10 million worth.

Let them discover oil and move in to the "Financial market" and see what happens?

when I watched the Zeitgest there was a question which I am never yet to get an answer about who owes what if the whole world is in debt ..how can we have more debt than assests we have around.....

[Georgesoros]

when I watched the Zeitgest there was a question which I am never yet to get an answer about who owes what if the whole world is in debt ..how can we have more debt than assests we have around.....

Gout. Yes you can owe more than your assets. Borrow from all friends and relatives and then you bank.... Soon they will come affter you if yous top paying. At that point you can ask they forgive you or borrow from a loan shack at a higher rate. Same thing with Greece. They borrowed more than they can pay, and now they are in trouble.

[Reticent Solipsist]

There will ultimately be the day of reckoning. Tsipras has actually played his game pretty well by making the Greek population seem like the victims after what four or five years of EU and ECB imposed austerity. The end game is nigh and might well end up with the EU/ECB/IMF troika opting for a carrot and stick approach that entails the reality that the debts have to be resolved with major write-downs -- that's just arithmetic and history -- for those of you who recall the Latin America crisis of the 80s to 90s and even going back to Germany in the 50s.

The commercial banks that have lent Greek tons of money will have to take responsibility for assuming bad risk -- a variant of the "moral hazard" argument that banks make assuming that if things turn awry they will be bailed out (by the ECB perhaps?). Based on my recollections from my student days, there was that mooted international debt facility agency wherein commercial banks were supposed to agree to a major reduction to the contractual debt-servicing burden of the debtor country, in return for the remaining debt being guaranteed by the debt facility agency -- or something to that effect. Secondly, there is just no way that the banks will get face value for what Greece owes. In the event, the banks would have to opt for less than face value, that is, market value. What is the discount value of the Greek debt today, anyone on Nipate?  Of this, they could then figure how much Greek interest payments and principal would be rescheduled at that market rate. 

As for the Greek government dealings with the sovereigns and multilateral lenders, say, the IMF, I read a statement attributed to MD Lagarde stating that the IMF might be willing to accept a situation where there is a restructuring of Greek debt or rescheduling of payments.

Lastly, Greek Prime Minister Tsipras will have to bite the bullet and do what Moi did in Kenya -- 1999-2001 -- by undertaking overdue reforms and adjustments. These will entail structural reforms such as making the labor markets more flexible, sealing tax loophole and enforcing tax payments by all Greeks -- many of whom evade filing their taxes accurately, and also changing the pension system so that people pay into what they eventually receive -- a self-sufficient system-- as opposed to the current situation where it depends on subsidies from the government even as it is untenable because of demographic changes in an aging country.

[RV Pundit]

Yap. Greece are very luckly. Other countries before didn't have much leverage. They were crushed as soon as there were signs of default. The greeks have squeezed the EU gonads. Unless Germany threaten to seize one island; this will end very badly for debtors.

There will ultimately be the day of reckoning. Tsipras has actually played his game pretty well by making the Greek population seem like the victims after what four or five years of EU and ECB imposed austerity. The end game is nigh and might well end up with the EU/ECB/IMF troika opting for a carrot and stick approach that entails the reality that the debts have to be resolved with major write-downs -- that's just arithmetic and history -- for those of you who recall the Latin America crisis of the 80s to 90s and even going back to Germany in the 50s.

The commercial banks that have lent Greek tons of money will have to take responsibility for assuming bad risk -- a variant of the "moral hazard" argument that banks make assuming that if things turn awry they will be bailed out (by the ECB perhaps?). Based on my recollections from my student days, there was that mooted international debt facility agency wherein commercial banks were supposed to agree to a major reduction to the contractual debt-servicing burden of the debtor country, in return for the remaining debt being guaranteed by the debt facility agency -- or something to that effect. Secondly, there is just no way that the banks will get face value for what Greece owes. In the event, the banks would have to opt for less than face value, that is, market value. What is the discount value of the Greek debt today, anyone on Nipate?  Of this, they could then figure how much Greek interest payments and principal would be rescheduled at that market rate. 

As for the Greek government dealings with the sovereigns and multilateral lenders, say, the IMF, I read a statement attributed to MD Lagarde stating that the IMF might be willing to accept a situation where there is a restructuring of Greek debt or rescheduling of payments.

Lastly, Greek Prime Minister Tsipras will have to bite the bullet and do what Moi did in Kenya -- 1999-2001 -- by undertaking overdue reforms and adjustments. These will entail structural reforms such as making the labor markets more flexible, sealing tax loophole and enforcing tax payments by all Greeks -- many of whom evade filing their taxes accurately, and also changing the pension system so that people pay into what they eventually receive -- a self-sufficient system-- as opposed to the current situation where it depends on subsidies from the government even as it is untenable because of demographic changes in an aging country.

[Reticent Solipsist]

Yap. Greece are very luckly. Other countries before didn't have much leverage. They were crushed as soon as there were signs of default. The greeks have squeezed the EU gonads. Unless Germany threaten to seize one island; this will end very badly for debtors.

There will ultimately be the day of reckoning. Tsipras has actually played his game pretty well by making the Greek population seem like the victims after what four or five years of EU and ECB imposed austerity. The end game is nigh and might well end up with the EU/ECB/IMF troika opting for a carrot and stick approach that entails the reality that the debts have to be resolved with major write-downs -- that's just arithmetic and history -- for those of you who recall the Latin America crisis of the 80s to 90s and even going back to Germany in the 50s.

The commercial banks that have lent Greek tons of money will have to take responsibility for assuming bad risk -- a variant of the "moral hazard" argument that banks make assuming that if things turn awry they will be bailed out (by the ECB perhaps?). Based on my recollections from my student days, there was that mooted international debt facility agency wherein commercial banks were supposed to agree to a major reduction to the contractual debt-servicing burden of the debtor country, in return for the remaining debt being guaranteed by the debt facility agency -- or something to that effect. Secondly, there is just no way that the banks will get face value for what Greece owes. In the event, the banks would have to opt for less than face value, that is, market value. What is the discount value of the Greek debt today, anyone on Nipate?  Of this, they could then figure how much Greek interest payments and principal would be rescheduled at that market rate. 

As for the Greek government dealings with the sovereigns and multilateral lenders, say, the IMF, I read a statement attributed to MD Lagarde stating that the IMF might be willing to accept a situation where there is a restructuring of Greek debt or rescheduling of payments.

Lastly, Greek Prime Minister Tsipras will have to bite the bullet and do what Moi did in Kenya -- 1999-2001 -- by undertaking overdue reforms and adjustments.These will entail structural reforms such as making the labor markets more flexible, sealing tax loopholes and enforcing tax payments by all Greeks -- many of whom evade filing their taxes accurately, and also changing the pension system so that people pay into what they eventually receive -- a self-sufficient system-- as opposed to the current situation where it depends on subsidies from the government even as it is untenable because of demographic changes in an aging country.

Tsipras and Greece had very weak hands but were behaving as if they had four aces. Just mind-boggling. Folks, we'll be hearing more about this debate in the next week, month and year.

*And I've  always wondered why Moi and the very competent Governor of the Central Bank of Kenya, Cheserem, are not given due credit for putting Kenya on the path of adjustment and reforms in the period 1999-2001. Most people incorrectly credit Kibaki for Moi's reforms! Does it have anything to do with the myth that some groups are "better" managers than others?

[RV Pundit]

Precisely. All the reforms Kibaki takes credit from were Moi's initiative. But he was better manager. The institutions, the regulatory & legal framework were set up during the bad days of the 90s. Kibaki for instance found Moi doing 95% budget from our resources..from early 90s when donors contribute more than 50%. Kibaki only managed to move that 3% up. All the Key instutions and laws were set up in late 90s..including KRA, CBK reforms, etc, etc, etc.

90s is when kenya underwent through painful reforms....from liberalizations, to opening up many sectors for competition, to name them....

Some were misguided..and Kibaki did well to overturn some of IMF/WB ideas..for instance in free primary schools,more social welfare funding, health care funding, etc etc.

*And I've  always wondered why Moi and the very competent Governor of the Central Bank of Kenya, Cheserem, are not given due credit for putting Kenya on the path of adjustment and reforms in the period 1999-2001. Most people incorrectly credit Kibaki for Moi's reforms! Does it have anything to do with the myth that some groups are "better" managers than others?

[Reticent Solipsist]

Precisely. All the reforms Kibaki takes credit from were Moi's initiative. But he was better manager. The institutions, the regulatory & legal framework were set up during the bad days of the 90s. Kibaki for instance found Moi doing 95% budget from our resources..from early 90s when donors contribute more than 50%. Kibaki only managed to move that 3% up. All the Key instutions and laws were set up in late 90s..including KRA, CBK reforms, etc, etc, etc.

90s is when kenya underwent through painful reforms....from liberalizations, to opening up many sectors for competition, to name them....

Some were misguided..and Kibaki did well to overturn some of IMF/WB ideas..for instance in free primary schools,more social welfare funding, health care funding, etc etc.

*And I've  always wondered why Moi and the very competent Governor of the Central Bank of Kenya, Cheserem, are not given due credit for putting Kenya on the path of adjustment and reforms in the period 1999-2001. Most people incorrectly credit Kibaki for Moi's reforms! Does it have anything to do with the myth that some groups are "better" managers than others?

Moi, especially during that structural adjustment program period deserves more credit than he's given. It was during this period that, as a young grad student, we worked on and constructed SAMs for several African countries - the Social Accounting Matrix, not the missile system! - using Kenya as our template for other African countries. By the way, the many nameless mid-to-senior-level Kenyan technocrats in the Finance and Economic Planning ministries were, in my opinion, the most competent on the entire African continent.

On Kibaki, I do not have a favorable impression of him at all. I actually rate him as a mediocre economist and a poor manager to boot -- see the myriad corruption scandals, allowing the Armenian drug runners to run amok in sensitive areas of the state, including at JKIA. Kibaki will forever remain a tribal minded leader who after losing the 2007 election by 650,000 votes refused to concede defeat and almost tore the country asunder.