Greek Gov Ready to 'Shave' Bank Accounts

[Tilted]

And then what? They become more productive producing what? So they end the excess government jobs and those people then have to go to work doing what and being paid by whom? Being more productive, by definition, means less people needed to do whatever, exacerbating their problem. I mean, do they have salt mines sitting idle or can they all go get paid to shovel #### in Siberia? What are they going to produce and for whom? I see them as last place and for a whole host of reasons that demands to get a hair cut and get a real job wont, can't fix.

Well, as a general matter, they need to be more productive overall - not necessarily more productive per person that is working. Frankly, they need more people working. Of course, you can't just turn that on (unless you do make-work and have some way of financing it). It takes time to develop industry and figure out ways to make a labor force productive - things or services that it can sell to the rest of the world, and for which it can create internal demand and a self-perpetuating cycle.

They're just ####ed, they've done this to themselves over time. But the thing is, people are willing to help them if they'll just demonstrate a modest amount of discipline and make modest concessions. People are willing to continue to finance their lack of productivity, maybe giving them time to fix their systemic problem and develop industry and productivity. But they are refusing that help. They are saying, we'll only let you help us if you'll do so while letting us continue to be as irresponsible and unrealistic as we've long been.

Their osition makes no sense. I don't know if many of them are just that oblivious to how ####ed they are, or if they're just that confident that the rest of Europe will cave. But their economy is already grinding to a halt. This week has been bad and, without a quick deal, it's only going to get worse tomorrow. And now they're hurting their tourism, which they rely so heavily on.

Pensioners can't get their benefits, and pensioners make up 103.6% of the nation. And I can't stress the significance of this enough: Capital controls for a nation that relies heavily on imports for essential life resources. The import of that reality, for the plight of Greek people, is hard to overstate.

 

[Larry Gude]

So why would a creditor take a chance on a nation that could not pay off its debt and had it "written off"?

Fool me once....

Putin on the other hand could play the role of a loan shark, dont pay me back no problem, the Greeks want to be Russians just like the Ukraines.

Greece HAS money. They HAVE an economy. The problem is that they don't have enough to do their day to day spending and make their payments. As is, they're not paying back anything. Tilted's argument is that if creditors 'man up' and let them suffer, Greece will, somehow, find the money they owe and pay it. Maybe they will? In the mean time, if you do business with them, say, sell them, I dunno, bread, and you're payments are tied to the Euro and with Greece in default, you don't get paid, can't get paid, so, you do what? Even if they already owe you whatever it is, if you stop doing business with them, that means your workers stop, right? You buy that much less ingredients. Maybe to start to lose your economy of scale and your per unit costs go up because of it. Now what? Do you start charging your other customers more???

This is a really interesting topic because it is where we're headed.

 

[Tilted]

Greece HAS money. They HAVE an economy. The problem is that they don't have enough to do their day to day spending and make their payments. As is, they're not paying back anything. Tilted's argument is that if creditors 'man up' and let them suffer, Greece will, somehow, find the money they owe and pay it. Maybe they will? In the mean time, if you do business with them, say, sell them, I dunno, bread, and you're payments are tied to the Euro and with Greece in default, you don't get paid, can't get paid, so, you do what? Even if they already owe you whatever it is, if you stop doing business with them, that means your workers stop, right? You buy that much less ingredients. Maybe to start to lose your economy of scale and your per unit costs go up because of it. Now what? Do you start charging your other customers more???

This is a really interesting topic because it is where we're headed.

That's not my argument at all. I'm not saying they'll find the money and pay their debts. Doing so, and accepting real austerity in deals with their creditors that would make it possible for them to do so, is the only thing that makes sense for them. The alternative is going to be much much worse - unless, as I've suggested, their creditors cave.

But they've made their choice not to. So I'm not saying they're gonna reverse course if their creditors take a hard line. I'm just saying their creditors should take a hard line. Let them default, the global economy will likely quickly be better off. Greece will be ####ed, but they'll have done the deed themselves despite others begging Greece to let them help.

 

[Larry Gude]

Well, as a general matter, they need to be more productive overall - not necessarily more productive per person that is working. Frankly, they need more people working. Of course, you can't just turn that on (unless you do make-work and have some way of financing it). It takes time to develop industry and figure out ways to make a labor force productive - things or services that it can sell to the rest of the world, and for which it can create internal demand and a self-perpetuating cycle.

They're just ####ed, they've done this to themselves over time. But the thing is, people are willing to help them if they'll just demonstrate a modest amount of discipline and make modest concessions. People are willing to continue to finance their lack of productivity, maybe giving them time to fix their systemic problem and develop industry and productivity. But they are refusing that help. They are saying, we'll only let you help us if you'll do so while letting us continue to be as irresponsible and unrealistic as we've long been.

Their osition makes no sense. I don't know if many of them are just that oblivious to how ####ed they are, or if they're just that confident that the rest of Europe will cave. But their economy is already grinding to a halt. This week has been bad and, without a quick deal, it's only going to get worse tomorrow. And now they're hurting their tourism, which they rely so heavily on.

Pensioners can't get their benefits, and pensioners make up 103.6% of the nation. And I can't stress the significance of this enough: Capital controls for a nation that relies heavily on imports for essential life resources. The import of that reality, for the plight of Greek people, is hard to overstate.

Please understand I am not trying to make excuses for Greece. I just think I am being realistic; this was the way they were, this is the way they are, this is the way they will be. They are NOT Germany where the norm is pretty much everyone is pretty much productive all the time as a simple rule.

As I read more about Greece, tourism, as you say, is HUGE as are services in general, some 80% of their economy, so, that doesn't stop, right? Why would that be hurt? If anything, maybe costs fall and it's even more attractive to go? They bring Euro's with them, yes? So, 80% of the economy continues. It seems they can feed themselves. They're NOT going to start making widgets to compete with Germany. They're not going to suddenly start growing huge excess's to export. They're big in shipping and that won't stop or everyone elses freight costs will go up as supply falls. They have some textiles and mining, so, that's a resource they, ostensibly, already sell on the current market.

There is something like $500 bil in Euro's floating around and Greece missing a $1 billion payment just caused a loss of $5 billion in value of the Euro.

I've read that our Wall Street helped them engineer swaps in the recent past to hide their deficits and debt. Ostensibly, Goldman and the others didn't do that for free. Not only are they thus culpable, they made money at it. Greek anger doesn't seem very hard to understand.

And, again, so, they have a bloated bureaucracy. So, they lay off, what, 20% of them and expect the rest to pick up the slack. Fine. What then of those 20%? Unemployment? Displace immigrants? If the immigrants get displaced, what about their landlords? So, real estate takes a hit.

I'm asking you to help me see what being 'tough' with them is actually going to do. So far, I ain't seeing it. :shrug:

 

[Tilted]

I guess my point is this. If the Greeks are wrong and they haven't called a bluff but rather have said no to the last best offer they're going to get - then they will soon go from asking for financial aid to asking for humanitarian aid. This will soon be a humanitarian crisis. But even with that being the case, I hope they were wrong - I hope they haven't just successfully called a bluff. For the world's sake I hope that, even though for Greece's sake that would mean something that my humanity would wish could have been avoided.

 

[Larry Gude]

That's not my argument at all. I'm not saying they'll find the money and pay their debts. Doing so, and accepting real austerity in deals with their creditors that would make it possible for them to do so, is the only thing that makes sense for them. The alternative is going to be much much worse - unless, as I've suggested, their creditors cave.

But they've made their choice not to. So I'm not saying they're gonna reverse course if their creditors take a hard line. I'm just saying their creditors should take a hard line. Let them default, the global economy will likely quickly be better off. Greece will be ####ed, but they'll have done the deed themselves despite others begging Greece to let them help.

But, what does that mean '####ed'??? Our posts are getting a little out of sequence so, maybe I need to slow my roll and allow you to sync us up. If they can feed themselves and most of the economy functions, tourism, shipping, some exports, they get the benefit of not having to make the payments and life pretty much goes on. Or I am missing something huge about this?

Accepting austerity, as they see it, has been part of the problem. Cutting social spending will create MORE idle people. Raising taxes will create LESS money in the hands of those that work. Again, unless I am missing something here, if they can feed themselves, have things people want, tourism, ships, some exportable stuff, they're just gonna go on anyway. Heck, if they fire the drachma back up, the sense of national unity may well allow them to do it in an relatively austere fashion and that pride, that motivation, good lord, if that works fairly well, is that what the EU wants, for everyone to see it is not necessary???

 

[Larry Gude]

I This will soon be a humanitarian crisis. .

Why? What factors will mean they can't feed themselves?

 

[Larry Gude]

That's not my argument at all. I'm not saying they'll find the money and pay their debts. Doing so, and accepting real austerity in deals with their creditors that would make it possible for them to do so, is the only thing that makes sense for them. The alternative is going to be much much worse - .

As they can feed themselves and have a core economy that other people WANT, I just don't see what could be worse and I see a LOT of upside to saying 'screw the debt'. Austerity simply means they tighten up their own belts so that they can give it to creditors. Put another way, if you owe me a dollar you don't have and I want you to tighten up your practices and cut a dollar in spending, basically, so you can give it to me, why would you do that?

 

[Tilted]

Please understand I am not trying to make excuses for Greece. I just think I am being realistic; this was the way they were, this is the way they are, this is the way they will be. They are NOT Germany where the norm is pretty much everyone is pretty much productive all the time as a simple rule.

As I read more about Greece, tourism, as you say, is HUGE as are services in general, some 80% of their economy, so, that doesn't stop, right? Why would that be hurt? If anything, maybe costs fall and it's even more attractive to go? They bring Euro's with them, yes? So, 80% of the economy continues. It seems they can feed themselves. They're NOT going to start making widgets to compete with Germany. They're not going to suddenly start growing huge excess's to export. They're big in shipping and that won't stop or everyone elses freight costs will go up as supply falls. They have some textiles and mining, so, that's a resource they, ostensibly, already sell on the current market.

There is something like $500 bil in Euro's floating around and Greece missing a $1 billion payment just caused a loss of $5 billion in value of the Euro.

I've read that our Wall Street helped them engineer swaps in the recent past to hide their deficits and debt. Ostensibly, Goldman and the others didn't do that for free. Not only are they thus culpable, they made money at it. Greek anger doesn't seem very hard to understand.

And, again, so, they have a bloated bureaucracy. So, they lay off, what, 20% of them and expect the rest to pick up the slack. Fine. What then of those 20%? Unemployment? Displace immigrants? If the immigrants get displaced, what about their landlords? So, real estate takes a hit.

I'm asking you to help me see what being 'tough' with them is actually going to do. So far, I ain't seeing it. :shrug:

I get you're not making excuses.

What being tough with them would do would be to allow European economies, and the global economy, to start to move on - take the hit and stop being held hostage in perpetuity. It would also strongly suggest to other global actors, e.g., to other nations, that despite everything that recent decades' experience has seemed to show us, reality is still lurking out there somewhere. It is possible that, at some point, she'll come knocking on your door and if you don't answer she has the ability to come crashing in anyway. We really, really, really need that message to get across. Too many actors have been getting away with acting as though reality is not a concern they need to be bothered to take into account, it can either be avoided forever or it would take so long to get within striking distance that little consideration need to be given to it so long as it remains small on the horizon.

As for their economy, and what this means for it: The people of Greece can't take money out of the bank, or they can only take small amounts out. If they were allowed to take more out, the banks would quickly have to close up completely. They just don't have the money to give to depositors. So people don't have money to spend. They don't have money to keep the economy moving. Demand is drying up because they don't have money, it's a self-perpetuating cycle. It doesn't take much to grind modern economies to a halt. And theirs is grinding to a halt as we speak. Pensioners - which a lot of Greeks are - can't get their full benefits. They don't have the money to buy the things they need, and thus even more demand disappears. And people aren't allowed to send money out of the country, or their ability to do so is meaningfully restricted. But at the same time, essentials that they need to live are imported - fuel, medical supplies, you name it. They can't pay for them, and no one is going to give them credit now. They are quintessentially ####ed. They are left praying that their creditors cave and give them another deal so that the ECB can start giving their banks loans again and so that, maybe, the capital controls can be lifted or relaxed. Beyond that, they're left hoping for humanitarian aid.

 

[Tilted]

Why? What factors will mean they can't feed themselves?

Baby formula for their babies. Insulin for their diabetics. Gas for their cars. That kind of stuff. Greece imports essential stuff, which is okay if you can pay for it. Lots of nations trade for things they don't produce themselves, things they'd struggle to survive without. But they can't pay for stuff now.


EDIT: And to respond to other threads, wrt tourism - it is reportedly already being affected. Who wants to vacation in a nation not knowing to what degree social order might break down while they're there? And to get money out of an ATM you have to wait in line behind 30 Greeks trying to withdraw their daily $70. And I sure as heck wouldn't want to carry a lot of money around on me when so many locals are short on cash.

 

[Larry Gude]

They can't pay for them, and no one is going to give them credit now. They are quintessentially ####ed. They are left praying that their creditors cave and give them another deal so that the ECB can start giving their banks loans again and so that, maybe, the capital controls can be lifted or relaxed. Beyond that, they're left hoping for humanitarian aid.

If 18% of GDP is tourism, is it fair to say that they have 1 in 5 'dollars' coming in day after day? Is it fair to say that anyone paying to use Greek ships, buying Greek exports, is going to want to keep doing so? From what I can tell, They import $2 for each dollar of exports so, on paper, they can pay for half their imports. That's ongoing daily transactions, yes?
Again, as far as I can tell, they can feed themselves, readily. So, It's not Somalia.

For the pensioners, for everyone, if there is food, then, as a small nation, it becomes a matter of coming together in crisis, yes? It's 11 million people. Is it not reasonable that each and every small town can come together and take care of one another for a couple week or even a few months as the government gets a new currency set up going? Hell, I thought the US could have sustained the pain of a couple of months of FIXING the banking crisis instead of band aiding it. And we're not even remotely one people as the Greeks are.

Right now, the Euro has lost more value in a day than the missed payment. What about next week? What, again, of the threat that Greece unites as Greeks, having the ability to feed themselves, a basically desirable economy, what of the threat to the Euro if they can handle this?

You keep saying it's unconscionable how they've throw out a great deal and I'll take your word for it but I will point out that they don't seem to think so and, from there, I'm trying to understand the basic large scale hurdles they must address and food is #1 and it seems like a soluble problem. Next, it seems to me, is getting their old currency up and running and I was thinking about this the other day; when they switched, where'd all them drachma physically go?

I just have a fondness of great moments and am pulling for someone to do something that is NOT a repeat of the the things they did to get in trouble in the first place. Greece in and of itself, seems to be a perfectly sustainable land. The US certainly was yet we chose to piss away our big chance.

 

[Larry Gude]

EDIT: And to respond to other threads, wrt tourism - it is reportedly already being affected. Who wants to vacation in a nation not knowing to what degree social order might break down while they're there? And to get money out of an ATM you have to wait in line behind 30 Greeks trying to withdraw their daily $70. And I sure as heck wouldn't want to carry a lot of money around on me when so many locals are short on cash.

You under estimate the power of a deal to an American in my view.

 

[Larry Gude]

Baby formula for their babies. Insulin for their diabetics. Gas for their cars. That kind of stuff. Greece imports essential stuff, which is okay if you can pay for it. Lots of nations trade for things they don't produce themselves, things they'd struggle to survive without. But they can't pay for stuff now. .

But they can pay for SOME stuff, yes? If I make baby formula, do I really want it backing up on my dock or maybe I am willing to discount it or even extend credit for a month or so? One of the huge weaknesses of our too big to fail world is that smart MBA's have refined the thing to a T and everything has to MOVE or the thing is going to run into serious problems. Gasoline, anything NEEDS to move or our highly efficient production and distribution channels get ####ed up, quick. What drug company wants it known they stopped shipping insulin?

I'm just trying to flesh this thing out. Greece has a WONDERFUL opportunity here and if they fix their waste, fraud and abuse as a consequence it will be of THEIR choosing and not some German telling them what to do.

So far, I am seeing Greece having a lot more to gain than lose and nothing BUT loss for the EU. You mention take the pain and cut them loose, well, Greece is still gonna have things to export, still want to import stuff and is still going to be desirable to go see. This is actually kinda exciting and I'd LOVE to see Too Big To Fail...fail. If only some.

We are way too tied to thinking things MUST be the way they are AND that that is best which I don't believe at all. What if this is THE moment people start taking their lives back from multi national corporations that can only function by controlling our lives?

 

[PeoplesElbow]

Someone mentioned Greece raising taxes, they don't really need to raise taxes but actually collect the taxes that they are owed.

A big part of the problem is the Greek culture, it is expected to cheat the government, bribe an official to get things done, and the tax system is more of an honor system than ours is. Cheating on your taxes in Greece is just how you do it.

http://boingboing.net/2010/05/04/satellite-photos-cat.html

http://www.wsj.com/articles/greece-struggles-to-get-citizens-to-pay-their-taxes-1424867495

So should the taxpayer debts be written off also?

 

[Larry Gude]

Someone mentioned Greece raising taxes, they don't really need to raise taxes but actually collect the taxes that they are owed.

A big part of the problem is the Greek culture, it is expected to cheat the government, bribe an official to get things done, and the tax system is more of an honor system than ours is. Cheating on your taxes in Greece is just how you do it.

http://boingboing.net/2010/05/04/satellite-photos-cat.html

http://www.wsj.com/articles/greece-struggles-to-get-citizens-to-pay-their-taxes-1424867495

So should the taxpayer debts be written off also?

Of course.

 

[PeoplesElbow]

Of course.

My point is eventually someone loses out, would you feel the same way if you found out that a portion of your 401k was wiped out because it invested in Greek bonds?

 

[Larry Gude]

My point is eventually someone loses out, would you feel the same way if you found out that a portion of your 401k was wiped out because it invested in Greek bonds?

Wouldn't I just get bailed out again as was done in '08?

 

[PeoplesElbow]

Wouldn't I just get bailed out again as was done in '08?

In this case no, GM bondholders were the ones who lost out in 2008 that debt was "written off"

 

[Larry Gude]

In this case no, GM bondholders were the ones who lost out in 2008 that debt was "written off"

I appreciate you are trying to make American sense of Greece using American reasoning but have we learned nothing these past 25 years about the real world aplication of the way we think other people ought run their business?

 

[GURPS]

Could??? You miss the auto bail outs? You miss TARP? Quantitative easing?

It's been going on in the US, non stop, from fall of '08 up to last fall, 6 full years of transferring about $1 trillion a year out of the economy and into Too Big To Fail.

WTF are you talking about Mr Gude
.... I was referring to the US GOV confiscating a % of deposits in American Banks