Greece ... Thank You

There is obviously a strong prospect of a Grexit unless Greece gets its act in order and implements reform that will lead towards a more balanced budgetary system. However, there is no natural co-relation between the position adopted by Greece and countries such as Ireland, Spain & Portugal (France would be also on the periphery of this mix!). There have been significant concentrated efforts to do a deal with Greece which would keep them in the Eurozone. A debt W/O is not on a table as the assumption is that if Greece gets one the rest of us will be clamoring for similar treatment!
I would not see a Grexit as being the first Domino of many but more of a recognition of failure by the Eurozone in completing a proper due diligence on Greece when it was initially accepted. All external forecasters indicated that Greek figures were manipulated to get them into Eurozone and that they would struggle to meet the parameters of staying there. Perhaps the best solution for both Greece and the rest of the Eurozone countries is for a period of exit incorporating sufficient support provided that they work towards an acceptable budgetary balance over an agreed period. I.e. Yellow card rather than red!
 
Firefly said:
I agree. Better the cut them lose and take the hit.
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Be careful what you wish for.

milamber said:
If Greece leaves the Euro then eventually all members will leave because the markets will round on the bond yields of the southern countries and Ireland. The markets will believe the euro is reversible. The problems with the euro would need to be fixed to avoid breakup and I don't think there is the political will or public support for common tax, common fiscal authority and mutualised debt.
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Agreed.

The mistake was allowing Greek entry in the first place.

Now, the situation has become extremely complex.

If Greece does exit it won't be a question of the Eurozone simply returning to where it was before the Greek entry.

I am sure this will not be lost on the IMF or ECB
 
Brendan,
1. Agreed we have high debt.
2. Agreed we have a narrow tax base.
3. Ageing population , not so sure (at least compared to EU neighbours)

I think we all have (Greek) views formed by a lack of hard info.
There is a general acceptance that Greeces elite took EU for a ride !
There is consensus that the Greek people will never ever ever pay back Billion 300.
There is a feeling that more sour medicine will sort Greece. Not sure it will, I heard civil servants have had a 50% wage cut so far, common sense says 50% is as much as can be borne?
There is a feeling that a Political fudge will re-stall matters eg re-re-re-stretch term etc, as Fine Gael seems proud of in having done for us?.

I worry that re -re -re stretching known (default) countries Ireland, Spain , Portugal , just masks the problems in Italy ,maybe France etc.
I fear there-be a bigger storm acoming !!
 
Firefly said:
Very interesting 3-part article by Der Spiegel below. When I opened each in Chrome it tries to print the arcticle, but just hit Cancel and it is displayed in an easy-to-read layout.

It looks like both Left & Right governments in Greece were both cooking the books over the years. The outcome does not look particularly rosy for Ireland either I must say....have our bond rates started moving north yet??

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Selected quotes from the above articles (which are IMO a fantastic walk-through of the euro to the present day problems):

The Greeks were able to borrow at interest rates that were only slightly higher than those that the German government paid on its bonds. "The euro was a paradise of sorts," says then-Greek Finance Minister Yiannos Papantoniou

With a steady flow of easy money coming from the northern European countries, the Greek public sector began borrowing as if there were no tomorrow.

Of Greece's working population of 4.4 million, roughly 1.5 million people work for the government -
That's 1 in every 3 ! Surely it's impossible to fund the public sector along with social welfare and pensions, never mind any capital projects and historical debt obligation when 1 in every 3 workers works for the government?

With tax revenues of less than 30 percent of economic output, Greece has the second-lowest tax rate of all euro-zone countries. The Foundation for Economic and Industrial Research (IOBE) in Athens estimates annual black-market sales at €59 billion -- a quarter of the official economy.

Although Germany and France are not guiltless for lending to Greece, Greece must obviously get its house in order pronto - there's only so far the can be kicked down the road.
 
Sophrosyne said:
Be careful what you wish for.
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The fact we have lent so little to Greece means we are not on the hook in the same way as other countries are. No doubt we would feel some pain though...I've mentioned our cost of finance could rise following a GREXIT. It would be probably better for Ireland if Greece stayed as it would keep the focus off us. But for the Greeks and the longterm stability of the euro, I think the Greeks should leave..
 
Does this mornigs deal save the Euro or is it just another case of "extend and pretend"?

Will it get through the Greek Parliment? Under the terms it needs to be accepted by Wednesday or Thursday I believe. Legislation passed under duress/time pressure is never a good idea.
Syriza may split because of this deal.
 
This was never a single issue of "saving the Euro"! While a Grexit would have been un-palliative to the Eurozone it would not necessarily precipitate a break-up or a 2 tier Euro. All of the remaining "PIG" type countries have co-operated in reaching austerity type agreements and all are complying with these agreements to date. Iceland was in a better position than Greece to default because it was outside the Eurozone. Most of its problems were historical and they reverted to a balanced budgetary position without the need of extensive external funds. German/Finland proposal for a 5 year exit was the alternative option open to Greece and that appears to be a worse option for them than the very severe package now proposed.
All current indications are that it will be supported in parliament by the opposition who are more right wing than Syrzia. Yes a Syrzia split is likely and either way it would appear that their time has come and gone.
Very harsh decisions had to be made by Greece whatever agreement was reached. Anti -austerity approach is fine where a realistic alternative is put forward. However the funds have now dried up and Greece is now both insolvent and Illiquid. Banks are closed and the economy is descending into a cash only society. This is not sustainable for any economy and even the Left wing Syrzia realize that they are in a frying-pan/fire scenario.
Unfortunately when the previous proposal was put to the Greek people the downside risk of a No vote was never adequately explained to them. Similarly when the troika entered Ireland had a Left wing Government put a choice to the people of austerity or no-austerity I'm sure it would also have been declined. Populism and realism are not frequent bedfellows. If so Joe Higgins and his party would be our next Government.
While Government Economies are not quite similar to those of a family there are broad similarities. The main one being that if you continually spend more than you earn you will eventually run out of cash and credit. What would the borrowing costs to Greece be if the exited the Euro? Also who would lend to them without a budget program that would facilitate a return to a balanced budget scenario. Russia are not going to finance a soft bail-out and even Syrzia recognize that their offer would come at a high price!
 
44brendan said:
This was never a single issue of "saving the Euro"! While a Grexit would have been un-palliative to the Eurozone it would not necessarily precipitate a break-up or a 2 tier Euro. All of the remaining "PIG" type countries have co-operated in reaching austerity type agreements and all are complying with these agreements to date. Iceland was in a better position than Greece to default because it was outside the Eurozone. Most of its problems were historical and they reverted to a balanced budgetary position without the need of extensive external funds. German/Finland proposal for a 5 year exit was the alternative option open to Greece and that appears to be a worse option for them than the very severe package now proposed.
All current indications are that it will be supported in parliament by the opposition who are more right wing than Syrzia. Yes a Syrzia split is likely and either way it would appear that their time has come and gone.
Very harsh decisions had to be made by Greece whatever agreement was reached. Anti -austerity approach is fine where a realistic alternative is put forward. However the funds have now dried up and Greece is now both insolvent and Illiquid. Banks are closed and the economy is descending into a cash only society. This is not sustainable for any economy and even the Left wing Syrzia realize that they are in a frying-pan/fire scenario.
Unfortunately when the previous proposal was put to the Greek people the downside risk of a No vote was never adequately explained to them. Similarly when the troika entered Ireland had a Left wing Government put a choice to the people of austerity or no-austerity I'm sure it would also have been declined. Populism and realism are not frequent bedfellows. If so Joe Higgins and his party would be our next Government.
While Government Economies are not quite similar to those of a family there are broad similarities. The main one being that if you continually spend more than you earn you will eventually run out of cash and credit. What would the borrowing costs to Greece be if the exited the Euro? Also who would lend to them without a budget program that would facilitate a return to a balanced budget scenario. Russia are not going to finance a soft bail-out and even Syrzia recognize that their offer would come at a high price!
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44brendan said:
This was never a single issue of "saving the Euro"! While a Grexit would have been un-palliative to the Eurozone it would not necessarily precipitate a break-up or a 2 tier Euro. All of the remaining "PIG" type countries have co-operated in reaching austerity type agreements and all are complying with these agreements to date. Iceland was in a better position than Greece to default because it was outside the Eurozone. Most of its problems were historical and they reverted to a balanced budgetary position without the need of extensive external funds. German/Finland proposal for a 5 year exit was the alternative option open to Greece and that appears to be a worse option for them than the very severe package now proposed.
All current indications are that it will be supported in parliament by the opposition who are more right wing than Syrzia. Yes a Syrzia split is likely and either way it would appear that their time has come and gone.
Very harsh decisions had to be made by Greece whatever agreement was reached. Anti -austerity approach is fine where a realistic alternative is put forward. However the funds have now dried up and Greece is now both insolvent and Illiquid. Banks are closed and the economy is descending into a cash only society. This is not sustainable for any economy and even the Left wing Syrzia realize that they are in a frying-pan/fire scenario.
Unfortunately when the previous proposal was put to the Greek people the downside risk of a No vote was never adequately explained to them. Similarly when the troika entered Ireland had a Left wing Government put a choice to the people of austerity or no-austerity I'm sure it would also have been declined. Populism and realism are not frequent bedfellows. If so Joe Higgins and his party would be our next Government.
While Government Economies are not quite similar to those of a family there are broad similarities. The main one being that if you continually spend more than you earn you will eventually run out of cash and credit. What would the borrowing costs to Greece be if the exited the Euro? Also who would lend to them without a budget program that would facilitate a return to a balanced budget scenario. Russia are not going to finance a soft bail-out and even Syrzia recognize that their offer would come at a high price!
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Over past few months i have read mountains of news coverage about the Greek situation but I still dont know why they need 86 billion in a new bailout. A few simple facts would be appreciated to put my mind at ease
 
trojan said:
Over past few months i have read mountains of news coverage about the Greek situation but I still dont know why they need 86 billion in a new bailout. A few simple facts would be appreciated to put my mind at ease
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Looking at it as a non economist (just as Noonan isnt), they need the new bailout so that they can pay back the older bailouts.
 
If Greece can pull off the (new) austerity and stay in Euro ,in spite of the known historical fudges, it will be a major coup for EU + Greece.

I too would appreciate some clear facts.
I do understand that Greece has a lot of Civil Servants , how does that compare to us?
Does Greek Civil Servants include , Education/Health/Police etc
Does Irish Civil Sevants include , Education/Health /Police etc.

Is Irish OLd age pension comparable to Greece?


I am trying/hoping to compare like with like and only then will I, like our economists make a call.

I am not confident that the Spin Merchants (on both sides) want to give concise and comparable info.
 
Civil service in Irl is about 30,000-35,000, only staff of departments.

Rest are public servants = teachers, Garda, doctors, etc.

Total is 300,000 approx in Irl.
 
As I said before, only Ireland has a flat-rated pension, at 230.30 pw.

All other countries have pension linked to previous wages.

So there isn't a Greek pension rate to quote to you.
 
I have found great difficulty in obtaining a clear understanding of the rationale behind the current need for a bailout package of c82bln. Essentially the package is twofold:
1. Circa 32bln of additional direct bailout funds from the EU. These funds to come directly from EMU member states. (current total Greek debt is c320bln of which only 63bln is "private". rest is from EU, IMF, ECB)
2. 50 bln of an asset backed fund. This was to be controlled externally but it now appears that the Greeks themselves will have control of these funds. The funds are backed by State Assets. Seemingly some islands and other assets owned by the State. Th e50bln to be utilized as follows; -
- 25bln to facilitate a recapitalization of the banks and enable them to re-open.
- 12.5bln to decrease existing debt (unclear what debt this is!)
- 12.5bln to support an investment program (I.e. a capital spend)
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Given that the last budget deficit was 6.3bln it would appear that the balance of bailout funds will be used to sustain the overspend over the next few years until a balanced budget is achieved. What is unclear is how much is due to be used to meet repayments on Debt/interest every year!

Gerry;- Pension payments overall are 42bln pa or 17.5% of GDP. This is well at the top of the EU league. However I cannot get a direct comparison with other countries as figure includes both SW pensions and Public service pensions. Average pension payout would be less than Irelands as cost of living and average wage is below ours.
 
Posted here by others before, but this article is well worth a read for the background. Particularly for the background on how it was loans to the Greek government that dragged the banking system down in the first place.
 
Greece owes circa 300 billion, Value of Greek assets 50 Billion....
Irish Mortgage holder owes 300,000 ,Value of house 50,000.

Greece only has enough income to pay normal bills and a small debt burden.
Irish Mortgage holder has enough income to pay normal bills and a small mortgage.

Greece hasn,t a hope of repaying 300 billion.
Irish Mortgage holder hasn,t a hope of paying mortgage.
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What to do .
Greece has debt reduced or re re stretched from 300 to 50 ie has just nuff to continue.
Irish Mortgagee has debt reduced or re re stretched from300 to 50 ie value of house.
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We then review in an ongoing manner
Greece ,to ensure long term sensible reforms are enacted.
Irish Mortgage , to recoup a reasonable % eg as values increase or to ensure he does not get a future windfall, as he gets back on his feet.
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Means .
Greece has some hope of seeing light.
Irish mortgagee has some future hope.
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I fervently hope that the actuality of any agreement which is so soured with Greece and EU will permit a (get out ) for all.
 
This is effectively what is being proposed Gerry (other than the debt write-down). The reason that debt will not be written down is that this would create a similar demand from other countries such as Irl, Spain, Portugal Italy for a similar write-down. However as in the case you mention above the most important aspect of any deal to Greece is that the annual repayments are affordable. The terms of the deal are to ensure that Greece's ongoing budget returns to a level where it is both balanced and includes an element of debt/interest payments. Not getting a write-down might cause some miff but essentially the priority is that they get the funding assistance they currently need and a repayment schedule that they can make. This does involve increased "austerity" but generally economists see this as being the only realistic option to recovery (Paul Klugmann and some others excepted). I suppose any lender doing a similar deal with the mortgage holder in your illustration above would insist on some cut-back in spending if an agreement was to be reached.
Greece have had previous chances and previous bail-outs and were on the road to recovery fairly recently until government cuts were reversed by Syrzia. Similar scenario to Left Wing parties coming into power in Ireland and embarking on a reversal of cuts previously implemented. Its harsh but necessary!
 
44brendan,
Largely agree and hear you.
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If it ends up as a case of the 300 Billion having been effectively written off ,provided Greece adheres to restructuring and that said restructuring does not create a (negative) austerity, ie too many cut-backs, we may avoid (for now) examination of other countries books.

I hope it works for the Greek people and I hope the Right wing elements in EU have not punished Greece too much..
I question was Greece really in recovery pre Syriza? Bear in mind these Left wingers are only in situ 5 months and were the Right wing incumbents any better?

Time will tell.
 
Gerry Canning said:
Greece owes circa 300 billion, Value of Greek assets 50 Billion....
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50B is the amount they've been asked to sell. The value of Greek government assets would be in the hundreds of billions - maybe more than a trillion. Parks, land, buildings, military assets, state owned businesses - it's a big country.

So if you want to compare them with a mortgage holder it'd be more like someone with a million euro in assets, 100,000 in interest only debt and maybe an income of 25,000.

If Greece want to say their debt is unsustainable then sell some assets and make it more sustainable, looking for more cash and simultaneous write downs from the same creditors is not a sensible or fair strategy.
 
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