Will There Be Another Last Minute Reprieve For Greece?

[Econoline]

All that goes to prove is that the U.S. federal system is fundamentally different from (and perhaps superior to?) the way the EU is structured. As you and I have both quoted Krugman as saying:

If Europe as currently organized can turn medium-sized fiscal failings into this kind of nightmare, the system is fundamentally unworkable.

[Gob]

Mississippi is nothing but a money pit:

$141 Billion

Alabama is nothing but a money pit:

$166 Billion

S Carolina is nothing but a money pit:

$88 billion

Tennessee is nothing but a money pit:

$482 Billion ( WOW!)


Conservatives really are shiftless losers.


yrs,
rubato

Totals only go to 2005 so they are far higher now.

Only Aspergers boy could take a thread on Greece and drag in his monocultural myopic monomania to it!!!

[Econoline]

His point was obvious to me: states within the US have similar problems without it turning into a disaster for those states (or the US as a whole) the way it has for Greece (and the EU as a whole)...and as a bonus, ironically, the USians who have the harshest opinions of Greece are members of the same party that runs those particular US states. Capisce?

[Gob]

His point (republicans b-a-a-a-d!!) was obvious to anyone, but it didn't need making yet again.

[Gob]

[Gob]

[Gob]

With two-thirds of ballots counted, results from the Greek referendum show voters decisively rejecting the terms of an international bailout.

Figures published by the interior ministry showed 61% of those whose ballots had been counted voting "No", against 39% voting "Yes".

Greece's governing Syriza party campaigned for a "No", saying the bailout terms were humiliating.

The "Yes" campaign warned this could see Greece ejected from the eurozone.

Some European officials had also said that a "No" would be seen as an outright rejection of talks with creditors.

But Greek government officials have insisted that a "No" vote would strengthen their hand and that they could rapidly strike a deal for fresh funding in resumed negotiations.

Greek banks will reopen by Tuesday, they say.

[Gob]

I'm off to the bank today. Going to borrow just over a million bucks, as with current interest rates I can afford it. In a couple of years time when interest rates are higher than they currently are, I will call my family together for a " referendum " to determine wether we want to pay back the money or not. Led by my instructions, they should follow through and support the no vote. I'll keep living in my new home, and let others pick up the tab for my now defaulted mortgage. I might then holiday in Greece.

[dgs49]

I may be wrong, but I think the Greek voters were delusional. The choices were not (a) accept the deal with its financial mandates, or (b) go back and negotiate a better deal. There is no better deal (for Greece) in the offing.

I think the EU has had about enough with Greece's attitude & half-assed measures, and is willing to write off the current debt, rather than giving Greece even more loans and hoping that they can service them.

Bankruptcy may be the end of the world, but it is also a new beginning. Returning to a near-worthless Drachma will make Greece a very attractive spot for European and American holidays, and may just be the shot-in-the-arm that the country needs to get some more people employed.

My impression is that the world financial markets have already written off those Greek loans, and the global impact of a Greek meltdown will be minimal. As for the Euro, that is yet to be seen.

[BoSoxGal]

[Long Run]

As has been pointed out before, the term "bailout" is a vague term. But there are two main types of bailout -- 1) a loan to an entity that can't get one from a normal lending source, and 2) a grant or donation to pay off bills and debts. All of the lenders on the list got the first type of bailout, and they have all paid back their loans with interest. This is an example of the government stepping in, doing something unpopular but necessary, and saving hundreds of thousands of jobs that would be lost, as well as untold declines in retirement and other investment assets, that would negatively impact everyone across our country and world-wide (i.e, as bad as 2008-09 was, it would have been exceedingly worse without that intervention).

What Greece is asking for and needs to avoid bankruptcy is A GIFT of $350 billion. They have already gone through several loan bailouts, and it is clear that Greece cannot repay its debt. Heck, take away the debt service, and Greece can't come close to paying for its governmental bills. It is time to let Greece default, go through a bankruptcy and reorganization, and figure out how to live within its means. The impact on Greece would probably be a little tougher in the short run, but much better within a short period of time. And the impact on the rest of the world will be minor.

Thus, on the one hand we have a necessary but unpleasant loan bailout of banks that could and did repay their loans; the failure to make the bailout loans would have been a world-wide catastrophe. On the other hand, we have a long-time incompetent national government in Greece that is asking for a donation of $350 billion, which will not solve its problems, and the failure of Greece will have minimal impact on the world economy.

The quoted post, from a far-left Scottish independence blog site, simply illustrates the ignorant and mindless comparisons that simpletons can come up with.

[Guinevere]

Long Run - I don't think its that simple. There are no international provisions for the bankruptcy of a sovereign nation. How would you accomplish such a thing, and assure that the nation continues to handle its responsibilities to its people?

Even the US Bankruptcy code, which allows for bankruptcies of municipalities, has no provisions for the bankruptcy of a sovereign state. As far as I understand, the Greek bankruptcy code is limited to businesses and individuals, not even municipalities have the right to file for bankruptcy.

Which, I think, takes Greece back to exactly what it's doing -- and what every debtor does either before or as part of the bankruptcy proceeding -- negotiate, negotiate, negotiate.

ETA: Looking into what was done in Argentina in 2005 . . . .

[Long Run]

I did not mean "bankruptcy" in the legal sense, but in its common usage. Greece will fail to pay its debts. It may negotiate with one or more lenders, but it may also simply fail to pay. At that point, the lenders take a loss. Everyone else ends up paying for this either directly in the form of taxes (in the case of government to government lending) or in the form of higher interest rates (as private lenders have to recoup the losses). This is another form of a bailout; though there may well be ways that lenders can seek to collect from Greek assets, more than likely, lenders write these off as bad loans. Then, Greece will have a hard time finding someone else to loan it money, which means it will have to reorganize (again in the common usage) by aligning its government outlays with its tax revenues.

[Guinevere]

Well you said "go through a bankruptcy and reorganization." How does that get accomplished? Under who's rules? How do priorities get set?

[Big RR]

This is another form of a bailout; though there may well be ways that lenders can seek to collect from Greek assets, more than likely, lenders write these off as bad loans.

Of course, given the magnitude of the debt, I would think this would be the last thing the lender's would want to do, and I think Greece is betting that this is the case.

Quite frankly, if Greece refuses to pay its debts, I would think lender's could levy on any Greek property within any jurisdictions where the lender could get a court order. I recall someone in the US levying against an Iranian (I think) ship in a US port once, but once this is exhausted the losses would have to be taken, unless of course the lenders can renegotiate the loans and carry them on their books as accounts receivable.

[Guinevere]

Typically you need a money judgment first. So the lenders would have to sue to collect the debt and have a court enter a judgment against Greece, ordering payment of that debt, Greece fail to pay it, and then some kind of execution issued which allows attachment of certain assets. What court is going to make that ruling? And again, where are the limits?

I'm not an international lawyer, and I don't do a lot of commercial work, but I see a lot of time, money, and process required, first.

None of this is simple, or easy.

[Big RR]

I agree; it is a complex issue and many national courts might be unwilling to hear the cases; further, as EU law is involved as well, there is a further wrinkle in whether EU courts or member national courts would be the appropriate forum. It could be interesting to work on.

Further, much as they might bluster, I find it difficult to believe the lenders (or at least most of them) would be willing to take such big losses on their books, and they will, I predict, eventually restructure the loans with Greece to avoid that.

[Gob]

Greece needed a "bailout" to repay debts from other "bailouts" which it hadn't paid back.

[wesw]

am I the only person in the industrialized world who has never had a loan or a credit card?

hell, I never even had a bank account from the time I was 21 til I was 45......

[Long Run]

Agreed that a quasi-bankruptcy for a country is not simple from a procedural standpoint. The concept is pretty simple though -- Greece cannot repay its ongoing operating costs, leaving aside its debt service, thus it has no hope of paying its debt. Why would any rational lender send good money after bad; better to take the tough medicine while it is not so costly.

Further, much as they might bluster, I find it difficult to believe the lenders (or at least most of them) would be willing to take such big losses on their books, and they will, I predict, eventually restructure the loans with Greece to avoid that.

The big lenders are the EU Commission, the EU Bank and the IMF (so-called Troika). The problems with providing yet another bailout to Greece is that (1) Greece cannot repay its debt, so there has to be significant debt reduction and slower payments with the very high likelihood that Greece still will not be able to successfully pay its debt, and (2) providing another bailout to Greece, which (despite the very real pain it is experiencing) has only adopted modest reforms to its profligate policies, will make the bigger problem countries of Italy, Spain and Ireland question why they are going through such a difficult reorganization. If Greece can implement half measures, default and get better terms, why can't the others?

The EU can ride through a Greece exit from the EU and even a total default without much damage to the EU economy, so there really isn't much of a downside to the lenders in maintaining their negotiating position.