It’s almost like the fear of a Greece default is worse than an actual Greece default. I know, it would be the worst thing to ever happen in the history of Earth but let’s freaking move on.
I tend to agree that the uncertainty sucks, uncertainty not about whether Greece defaults but about what the repercussions will be. But, I’m an impatient person, so I need to work on that impulse.
I wonder what would be the recovery rate if Greece were to default today. I can’t help but think that the recovery rate would be a bit higher than the 50% or wherever Greece’s short term debt is currently trading.
- Kick Greece out of the Eurozone. 2. Re-instate drachma. 3. Print drachma/inflate to pay debts. The by-product of this would be every other deadbeat European country would shape up in fear of being relegated to second-tier status like Greece.
justin88 Wrote: ------------------------------------------------------- > 1. Kick Greece out of the Eurozone. > 2. Re-instate drachma. > 3. Print drachma/inflate to pay debts. > > The by-product of this would be every other > deadbeat European country would shape up in fear > of being relegated to second-tier status like > Greece. ^Truth
I’m sure if it were that simple it would have been done by now. If you kick Greece out then what about Spain and Italy? If they hold too much debt and default do you kick them out too? If you help out Spain and Italy, how pissed off and isolated would Greece feel? If you kick Spain and Italy out you might as well just disband the whole thing and call it a failure.
There was a good article in the Economist the other week about the consequences of disbanding the Euro. It seems that, although many leaders have thought about it, the costs would be astronomical and would be a last case scenario.
^ I saw that too.
Just wait until Germany gets that war machine fired up again. It’s been way too long for them.
I think Greece should just do an outright default, I think that will be more likely than an austerity plan. I can’t think why Greece would fire its own citizens to the benefit of foreign debtholders.
I’ve been working the same global market risk job for about 1.5 years now and I swear, they should have just told me I’d be a PIIGS analyst, I’m so sick of hearing this same beat ol’ sh*t. Every g*ddamn week it’s the end of the earth if someone doesn’t sign something. I mean the powerpoints and news headlines from a year ago are literally all but identical. At this point it’s almost more obnoxious than the 24/7 Anna Nicole Smith coverage. If I were the German’s I’d take the quick exit. 2-3 years to recover from a sharp mess that way using their strong fundamentals rather than suffering through 5-10 with those losers. Not saying that’s the practical solution.
murders&executions Wrote: ------------------------------------------------------- > Just wait until Germany gets that war machine > fired up again. It’s been way too long for them. +1
Stocks & Blondes Wrote: ------------------------------------------------------- > murders&executions Wrote: > -------------------------------------------------- > ----- > > Just wait until Germany gets that war machine > > fired up again. It’s been way too long for > them. > > > +1 +1 I feel like Octoberfest trends could be a strong predictor.
Reggie Wrote: ------------------------------------------------------- > I’m sure if it were that simple it would have been > done by now. > > If you kick Greece out then what about Spain and > Italy? > > If they hold too much debt and default do you kick > them out too? If you help out Spain and Italy, how > pissed off and isolated would Greece feel? If you > kick Spain and Italy out you might as well just > disband the whole thing and call it a failure. Italy and Spain are not the same as Greece. They are still salvageable; Greece is not. The endgame is you either boot out the misbehaving entities, or the proper behaving entities will remove themselves and the EMU will blow up.
They don’t need to kick countries like Greece out of the Eurozone, provided that these countries are able to adhere to some sort of fiscal responsibility guidelines. Obviously, this should have been done much sooner. New Eurozone countries (Malta? Slovenia?) had to demonstrate fiscal discipline for years before they were accepted into the monetary union. It shouldn’t be too much to ask that countries like Greece, that joined earlier, should commit to similar economic guidelines. At this point, a Greece default will probably happen. My feeling is that people are worried about the chance of a “disorderly” default compared to an “orderly default”. The last time I checked, Greek CDS implied a recovery ratio of around 20%, which is probably irrational if all of Greece’s creditors were to be paid the same amount per dollar that they’re owed. So, most likely, people are worried about the possibility that some creditors will be screwed at the expense of others, or that the default gets drawn out and nobody gets paid for a long time. So, if the EU or Greece can somehow come up with an organized and peaceful default that everyone agrees upon, then that might be the best action. However, in reality, everyone is going to argue about how to slice the pie, and that might cause even more uncertainty than what we’re currently experiencing.
The way the Eurozone is set up severely compromises its ability to use monetary policy to dampen economic fluctuations. So, they *must* commit to strict fiscal guidelines instead. Otherwise, like ChickenTikka has probably said to dozens of young Indian girls, “sorry, it’s not going to work”.
ohai Wrote: ------------------------------------------------------- >It shouldn’t be too much > to ask that countries like Greece, that joined > earlier, should commit to similar economic > guidelines. Agreed, but they flaunt the requirements with the help of IBs. Remember this nugget? http://www.dailymail.co.uk/news/article-1251280/Goldman-Sachs-new-storm-secret-deal-mask-Greek-debts.html
so greece is trending towards default again…do they really need to be kicked out to make a point?
default has to happen right???
Lol, nice excavation of an old thread. I tend to agree with you, but this has stopped appearing logical to me for some time.
Pensions cut about 40%, unemployment around 24% (about 50% for 15-25 year olds) with wages down about 25% from the peak. GDP has fallen more than 30%.
Compare this to US’s 25% unemployment and 27% GDP drop during the Great Depression. Now I know the comparison to the Great Depression is less exact given a shadow economy, existence of safety nets and lack of a dustbowl famine but we get the general point.
Yet, there’s always someone (usually clueless) that chimes in saying the Greeks need to make more sacrifices, so who knows. If I were Greek, I’d have voted myself out a long time ago.
Ironically, it’s much worse than the news makes it out to be. Wages were cut again. Making 600-800 euros a month is considered decent now… The country is corrupt and the citizens just don’t care about what the government says because they have no respect. The government passes a law (eg no smoking inside restaurants) and the citizens don’t listen. They need a wakeup call and need to default. Greeks (I’m Greek-American) piss me off and deserve everything they have coming to them with regard to the economy.