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Advantage Greece

Stephanie Flanders | 12:25 UK time, Wednesday, 3 March 2010

Greece looks to all the world like a country with its back against the wall, forced by the markets and the European Commission to spit out new austerity measures this morning, in advance of the Greek prime minister's crucial meeting with the German chancellor on Friday.

But don't count them out yet. The Greeks have three cards up their sleeve. And make no mistake: behind the scenes they are playing them for all they are worth.

The first is that if there's one thing the European Central Bank hates more than profligate governments, it's the overpowerful - and oh-so-American - ratings agencies. And right now, as Greek officials keep reminding their eurozone colleagues, one single ratings agency has the capacity to send the Greek financial system over the edge.

I'm exaggerating. But trust me, so are the Greeks.

As I've discussed before, the ECB has been giving back-door help to the likes of Greece since the start of the financial crisis, by letting eurozone banks post lower-rated sovereign debt as collateral for oodles of cheap liquidity.

Those rules were supposed to go back to normal at the end of the year. As of today, Greek debt would still qualify. But if Moody's follows the other leading ratings agencies and further downgrades Greece, Greek debt would be beyond the pale.

That could have a massive effect on the price of Greek debt: arguably, the single most important factor propping it up in the past year has been that it can be swapped for free money at the ECB.

And if Greek debt tumbles in value, that, in turn, could cause big problems for not just Greek banks but all the many other banks across the Eurozone who are holding Greek sovereign debt.

Yesterday, Ewald Nowotny, a member of the ECB Governing Council, said it was "an unacceptable situation" that "the fate of Greece, and if you are going to be more dramatic, the fate of Europe depends on the judgement of one ratings agency."

The ECB President Jean-Claude Trichet has always said the Bank would not change the rules for just one country. But it can and will change the rules for the sake of the eurozone banking system. Especially if can take the US ratings agencies down a few pegs at the same time.

When the terms of the European support package for Greece are revealed, expect the ECB and its collateral rules to be in the mix.

The Greeks' second secret weapon is that there is, in fact, nothing to stop them going to the IMF - with of without the EU's blessing. If their European partners push them too hard, that is almost certainly what they will do.

Threatening to go to the IMF is a last resort (it could also backfire - because it's not clear that the IMF, on the basis of Greece's, "quota share" at the Fund, would be in a position to give it a big enough loan.) But given French and German hostility to the idea of an IMF deal, it's a useful card for the Greeks to have.

Finally - there's that secret weapon which is not a secret at all. Greece is in the eurozone. And there is zero confidence that a Greek meltdown could be contained within Greek national borders. If Greece goes down, most in the European Commission now think Portugal and maybe Spain will follow.

As I've said before, there ought to be a way for Greece to restructure its debt, without the sky falling in on everyone's heads.

When Argentina defaulted on its sovereign debt at the end of 2001 the short-term results were extremely ugly. But the economy grew by more than 8% a year from 2003 to 2007.

For all that, when you talk to officials in Brussels or Frankfurt, they cite Argentina as the example to be avoided at all costs.

For the powers that be in the eurozone, it is simply inconceivable that Greece should be allowed to renege on its debts. As long as that remains true, Greece is a lot stronger than it looks.


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  • Comment number 1.

    Stephanie wrote:

    "For the powers that be in the eurozone, it is simply inconceivable that Greece should be allowed to renege on its debts. As long as that remains true, Greece is a lot stronger than it looks."

    But where does that leave us with no 'friends' to bail us out! I really shouldn't need to write that as it is obvious, but really shouldn't we be more concerned with our own econo/political malaise.

  • Comment number 2.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 3.


    Another trick they have up their sleeve is that they have stopped spending like their is no tomorrow. (Gordon, please note).

    Greece is the council house with the benefit claimant on EU Street and as long as her wealthy neighbours keep paying everything will be ok.

  • Comment number 4.

    It will be an interesting month, that is for sure.
    What worries me now is what will happen after the Greek debt issue is settled, one way or another.
    Will the hedge funds leave the eurozone alone? I don't think so. They will certainly turn their attention to Italy or Spain, both far bigger economies with almost equal problems, it's just that they were not "naughty" in their reporting like our previous Government. And that's when the real party begins...
    The fact that we (Greece) are a small economy makes us an easy target, but at the same time it means that we are easier to "rescue". It won't be the same with the next target, and the list of potential targets is longer than post people think.

  • Comment number 5.

    ........a word of advice, sell sovereign debt, buy gold!

  • Comment number 6.

    "When Argentina defaulted on its sovereign debt at the end of 2001 the short-term results were extremely ugly. But the government was back borrowing from the global market barely three years later, and the economy grew by more than 8% a year from 2003 to 2007."

    ...yeah - we were all booming then - Argentina benefitted from there being lots of 'world customers'.
    ....where are those customers now?
    They were also allowed to devalue their currency - which the Greeks can't do.

    It's when the media start sounding the all clear - the rest of us should put our hats on.

    "As I've said before, there ought to be a way for Greece to restructure its debt, without the sky falling in on everyone's heads. "

    I agree - but restructing it isn't 'reducing it' - all you're doing is another Goldman trick and pushing it into the future.

    This is where the (oh so lamented) public got their crazy "remortgage and buy a yacht" ideas from.

    Capitalists refuse to see the debt - all they can see is the repayments.

    At about 90% of debt to GDP countries start going into a 'low growth mode' and the possibility of ever paying off the debt vanishes.

    Just ask Japan - their current debt is 192% of GDP and still rising because they haven't seen annual GDP growth of more than 3% since the lost decade.

    ....or do we no longer bother with history to indicate the possibilities in the future (or maybe we're just selective which bits of history we ignore)

  • Comment number 7.

    "As long as that remains true, Greece is a lot stronger than it looks. "

    Yes, my point on this and other blogs.

    And the UK (Johnny-No-Mates) by comparison, with an identical deficit, is much weaker than it looks (if that's possible).

    Both Cameron/Osborne and Brown/Darling will shortly be auditioning for the role of the next King Canute; nothing they can do in the short or medium term will avoid our fate.

  • Comment number 8.

    2. At 12:55pm on 03 Mar 2010, ATNotts wrote:

    "The UK is now working with a peripheral currency which can be played with at will by speculators and so called investors. You only have to look at the childish reaction to an opinion poll at the weekend suggesting a Potential "hung parliament" (stupid expression, anywhere else it would be coalition)to see that by being outside a major currency we have been open to speculation that would have never had happened had we been part of the Euro (or for that matter the US Dollar area)."

    This is a very good point - we are vulnerable to speculators - and the idea that markets are efficient is blown out of the water when the news of a single poll jolts the currency speculators - but anyone who lives in this country knows that the possibility of a hung parliment is always the case when we're about to change from one bunch of numpties to the next.

    This is because at the end of every lengthy period of a majority Government - the floating voter gives up hope on politics, meaning the results are closer.

    Considering the last 2 elections have been embroiled in a postal voting scandal which was reportedly "more suitable to a bannana republic" - will the people of this country believe the result anyway?

    After the 'Florida fix' in the US - nothing would surprise me.

  • Comment number 9.

    "The UK is now working with a peripheral currency which can be played with at will by speculators and so called investors."

    Good post.

    Unfortunately none of the two main parties have the honesty and the guts to do anything.

    The Conservative position is puerile and negative.

    The Labour position is even more shameful. In power for 13 years and no leadership or will to counter the xenophobic poison and drivel that springs forth at the mere mention of the word Euro.

  • Comment number 10.

    I hyave been saying for some time now, to anyone who would listen, that it would be a mistake to underestimate the Greeks and the Greek people. They are proud: and i8f they have been living on boorowed time and money in recent years they are not alone in that. I still believe that their sense of national pride and soidarity will mean that the Greek people will not allow Greece to fail. Would that I were so confident of our own people pulling together in the hard times to come.

    Add to that national solidarity, the need to solidaritry among Member States in the Eurozone and I do not believe that Greece will fail.

    I do belive that the focus on Greece and the Euro is designed to divert attention away from our own problems: and that we would be better off trying to solve them.

  • Comment number 11.

    2. At 12:55pm on 03 Mar 2010, ATNotts wrote: - I've never read such rubbish. There was no childish reaction. You are simply naive enough to believe what you reaqd in the newspapers. It is only speculation that the £GBP dropped because of the opinion poll you mention. Many think the drop was to do with the Prudential/AIA deal.

    No-one is punishing us for the way we vote. People have money at risk and if they think there is going to be a hung parliament then their money is going to be at more risk. So they are just covering themselves.

    Your comments are naive in the extreme.

  • Comment number 12.

    Someone has to say it, so it might as well be me-Beware Greeks bearing very large debts- for they are

    testing its partners in Europe to find out how far they (we) can be pushed. Fear of the unknown, the ABYSS

    of the knock-on affect of a Greek financial collapse , gives confidence and power to other members of

    the Euro community (PIGS). Perhaps we should be considering our options?

  • Comment number 13.

    Once it became apparent the banks and financial services were running the US government they proceeded as usual with their arrogant ways. Banks could be too big to fail but not countries. The Rating Houses, who did nothing during the false bubble they helped to create, now look to make billions lending money to troubled nations facing financial difficulties created by the very industry that now deems them unworthy of assistance...maybe worthy, but at much higher rates only making the problem worse. Until the banks are downsized nations will be faced with extortion from the bankers. The banks have turned into a mafia type organization that causes the imposition of high taxes on citizens to satisfy their greed. Legislative bodies and governments can structure the banking industry to a less ominous stature and should do so....unfortunately they will not because they are owned by the banks. Be prepared to be robbed again and tell your children to hide their money in a hole in the yard so the banks can't steal it. No one made more in interest on the money in banks than they lost in retirement and investment accounts. I hope the Greeks form a national bank.

  • Comment number 14.

    In many ways Greece's current position resembles that of Argentina in 2001 before it defaulted on its debt, big deficit, large public sector and a dependence on creditors for short term credit. However, unlike Argentina Greece has not pegged its currency to a trade partner (in this case the US dollar), instead it is locked into a common currency with nearly all its neighbours preventing any potential recovery. If Greece were to default on its debt the Euro would plummet affecting not only Spain and Portugal but the whole Eurozone. The EU's biggest worry is not a sovereign debt crisis within the EU but a collapse of the Euro. That's Greece's biggest card!

  • Comment number 15.

    Very good article (real good background info instead of the typical British and other stereotypes that we read in many other cases).

    I totally agree that it's so unacceptable the fact that some 'US ratings agencies' (or e.g. the likes of irrelevant people who give nothing back to any society like Mr. Soros) can affect the EU and its currency so much (either via Greece or via whichever other EU state)! Not to mention the fact that all those 'US ratings agencies' were so very much exposed with big scandals not so long ago remember? So the 'judge' is really dirty actually apart from being a ... foreigner as well!

    All the above show one thing: there is no EU really and no serious leaders leading it either (and hence the EU is at the USA's mercy still). If there was a serious EU union or simply 'business/co-operation' such things would never happen. And the 'rich' EU countries would also doing business within the Eurozone (e.g. in Southern or Eastern Europen countries, like Greece) to help and protect the whole EU economy instead of outsourcing all their work to poor/cheap working hands countries in the East like India, China, Bangladesh etc.


  • Comment number 16.

    Greece is too big to fail ;)

    Several years ago (I think it was about 4) I predicted what I termed "Euro Crunch". We are seeing the first tremors of it (along with the Iceland wobble). Four years ago, these scenes were unimaginable - but yet they came to pass. Of course, if the banks are "too big to fail", then Greece must surely also qualify. There's no way on God's Green Earth the French and Germans will let their Socialist utopia crumble before their eyes. No, the EU tax payers and net contributors will be bailing out like a Cambridge eight. And unlike certain other countries where this funny thing called freedom exists there won't be any choice or referendum (Conservatives, cough, cough) on the matter. The reality then, ultimately, is a lower standard of living for tax payers, and anyone who accesses public services, across Europe.

    So, will Euro Crunch still happen as I originally envisaged? Probably not. It will be more like a long slow whimper than a crunch. Things are looking decidedly dodgy though - and it wouldn't take that much to set the dominoes toppling - but in the end the long suffering tax payer is always there to step in to the breech and save the day. I'm just glad I'm not one of them.

  • Comment number 17.

    #1. John_from_Hendon wrote:

    "I really shouldn't need to write that as it is obvious, but really shouldn't we be more concerned with our own econo/political malaise."

    Of course we should be more concerned with the state of our own economy, and I'm sure we all are, but that does not mean that we cannot also be interested in and discuss other economic issues.

  • Comment number 18.

    Once again a bloated government is in debt because of high government spending, change Greece for the UK and that is us in a couple of years unless somebody, (Tories, year right) get a grip and sort out the real mess in this country.

    A little maths, illegal and legal economic migrants in the UK 3 million (migration watch)

    Thats 3 million new Liebore votes, add that to a cynical almost illegal moving of the boundaries so that 1 liebore vote = 1.1 to 1.2 Tory votes means that the Tories need to win far more individual votes to get the same number of seats means we are stuck with the same bloated government or a hung parliament which wont sort out the problem.

    Now what has this done to the economy
    well 2.5 million people on the dole, all needing benefits, because bottom of the rung jobs taken by immigrants, often taken on by unscrupulous employers to force down wages.

    To cope with the influx, millions of NON jobs created specifically designed for these LieBore votes, including interpretors, ethnic diversity officer all paid for by the government. Massive increases needed to public services to cope with the influx.

    NHS second largest employer in the world for a country with a population of only 1% of the worlds total, the majority of those jobs nothing whatsoever to do with providing medical needs, which has to have a budget that exceeds that of Greece.

    2.5 million extra houses needed caused by influx of migrants = house prices sky rocket so much that people are mortgaged beyond what is financially possible. This then leaves less disposable income so that cheap Chinese goods are the only affordable option so money leaves the country rather than being spent in the UK and Euro zone. A rise in prices caused by a rise in oil due to a war started by an oil barron looking to increase revenue from is family and friends oil stock holding, supported by LieBore and the subprime housing market collapses because everything suddenly becomes more expensive. The same happens in the US.

    Education standards abysmal because class sizes, especially in deprived areas, too large due to children of migrants means that the output of state schools is not fit for the private sector needs, who in turn beg for more migrants to fill skills gaps.

    All this extra cost then means we wont be able to pay proper pensions for the retired due to not enought wealth generators in the UK, due to the fact that the only jobs created are in the wealth takers area of government.

    Businesses dont want to open up in the UK due to punitive taxes, ridiculous HSE and EU regulations ( most of which are ignored by the rest of the EU) and Political correctness gone way way beyond mad.

    Generation after generation of youth unemployment leading to higher crime rates and massive increase in drugs use which in turn creates even more crime.

    in 1997 LieBore was handed a near perfect economy with the pensions problem solved. To cheat its way into stopping in power we are now becoming Greece part 2 and as everybody knows the sequel is always more scary than the original.

    Its just a shame we cant keep the hard working immigrants and get rid of some of our bone idol.

  • Comment number 19.

    #2. ATNotts wrote:

    "And for all the very good reasons that you have laid out it was an extremely bad mistake that the UK didn't join, at the start, when it had the opportunity to do so."

    I am staunchly pro-European, but do not agree that it would have been beneficial for the UK to join the euro from the outset.

    Locking ourselves into the exchange rate as it was at that time would have been completely ruinous, and seeing interest rates suddenly fall by several percentage points in an already-overheating housing market would have made our property bubble - and the crash that followed it - even more spectacular.

    It is quite possible, in fact, that having such a major economy amongst the PIIGS (which would then, presumably, have to be called the PIIGGS) would have been the final straw that brought the single currency to its knees.

  • Comment number 20.

    No doubt some fix will be cobbled together to ensure the short term survival of Greece. It is largely irrelevant since the big European shoe to drop is Spain. Spain is beyond salvage and this will become apparent when market attention turns to all things Iberian.

    Despite their famed eficiency and discipline the Germans seem perpetually oblivious to the concept of Carpe Diem. Instead of fending off second rate insults about their past they should be offering up true leadership. They should be acting as the Eurpoean spearhead in an all out attempt to shine a bright light on the activities of Goldman Sachs and their ilk.

    Who was it that entered into a swap with Italy at LIBOR Minus 16.77%? Who was it that threatened the life of Gustavo Piga for unearhthing and publicising this deal?

    What other dodgy deals have been going on? How can you possibly fix any problem if you don´t know what the problem is? Where are the Germans in all this? They hold all the cards - everyone does things our way or we, Germany, exit the Euro. Simples.

    That none of this will happen, that no-one is remotely interested in Gustavo Piga, should tell you all you need to know about the future.

  • Comment number 21.

    Looking beyond the immediate crisis, the PIIGS, since they cannot devalue their currency, will have to shrink their public sector and cut wage costs etc by up to 20% to return to the "exchange rate" at which they locked themselves into the Euro, and again achieve parity with Germany. Then they'll have to increase private sector activity, probably calling for inward investment. Plus more investment to "go green". It's one hell of a mountain to climb! As for us in the UK, apart from not being locked into the Euro, we'll have to do exactly the same. Will we (and the Greeks) be willing to swallow the medicine ? I dunno! Ask the BA Cabin crew!

  • Comment number 22.

    #2 ATNotts. You should work for a bank (maybe you do), as all you offer is a false choice. Why should anyone be forced to choose as to whether to bend their knee to a bunch of bankers and speculators, or to a bunch of second rate beaurocrats who are completely disengaged from the real world.

    It has nothing to do with Euro scepticism, and everything to do with whether you consider yourself to be a free thinking sentient human being or a serf. That is the real choice and it is not hard to make.

  • Comment number 23.

    Stephanie - Very relevant to keep Greece on your blog. You are right pointing out the possible impact on Iberia et al. They have an even bigger black economy "culture" than Greece.
    #2 The Euro is a new and vunerable currency. We would loose our QE mechanism, among other things, if we joined and played by Euro rules in this current financially unstable climate.
    #1 There'll be plenty of scope in the coming days / months for GB economy to be analysed to death. I doubt if it'll be that long even though there are lots of positive utterances currently being spun.

  • Comment number 24.

    the success story of Argentina shows that a country in trouble would be mad to honour its soverign debt to overseas bondholders

  • Comment number 25.


    "I'm exaggerating. But trust me, so are the Greeks."

    How interesting. In the very same sentence that you first tell us about your dishonesty and finish with that of the Greeks you still without any sense of irony ask us to trust you both.

    No i don't trust you or the Greeks. Neither of you have provided any reason to be trusted. As for rating agencies - forget it. The markets have already priced in the UK not being AAA. The rating agency is following the market not vice versa. Perhaps you can trust me on this. If that proves to be too much then perhaps you can trust the 10 year yields of the UK gilts versus the 10 year bond yields of those nations with a current AA rating.

    So forget quoting ewald nowotny; an economist by profession and therefore detached from any normal measure of rationality who instead of placing the blame for Greece's mess on the Greeks and their frofligacy is attempting to blame the big bad rating agency who have recently attempted to discuss risk in a slightly more nuanced manner than previously - remember the AAA toxic debt CDO's etc etc that brought us to this pretty picture.

  • Comment number 26.

    "It won't be the same with the next target, and the list of potential targets is longer than post people think."

    Yes it is a long list.

    The important thing is where are we (UK) on the list. I think you know my answer; we are near the top of the list of potential targets.

    The truth is that no currency is truly safe. Some currencies are just safer than others. It also helps if the currency is a big currency, reserve currency like the USD or the Euro (touted as a future reserve currency).

    Gold is safe. Just a bit of a sod to lug around on a pub crawl :)

  • Comment number 27.

    "Just ask Japan - their current debt is 192% of GDP and still rising because they haven't seen annual GDP growth of more than 3% since the lost decade."

    Gordon Brown pay attention.

  • Comment number 28.

    I have never counted the Greeks out. I have considered them victims of unregulated American-imported oderivative trading and default swaps.
    Thank you for pointing a fundamental flaw in the world rating system: American have the power to wreck havoc through their ratings agencies, which in turn (in this case) have the power to send the Greek financial system over the edge. I don't think you're exaggerating.
    The European Central Bank (ECB) is known to play behind the scenes, and they are a clever bunch. What's more don't be surprised to see the ECB downgrade Moody as a rating agency if Moody downgrades Greece. The ECB is much more sly than the American Feds, and quite capable of beating them at their own game(s).
    The Greek debt will not tumble. The ECB is quite aware of what the Americans have done with their derivative trading and ugly default swaps. I'm sure they are working on the problem which they well know is hitting the other stupid counries (Spain, Portugal, UK, Italy and Dubai).
    Yesterday, Ewald Nowotny, a member of the ECB Governing Council (as well as Austrian economist, social democratic politician and Governor of the National Bank of Austria) said it was "an unacceptable situation" that the fate of world finances should depend on how an American rating agency, like Moddy" plays the market with shakey valuations. I mean how come the United States of America, trillions of dollars in debt, is still rated AAA!
    The ECB President Jean-Claude Trichet said that the EU is in the process of changing the rules for the sake of the eurozone banking system. Especially if can make the US ratings system circle the drain.
    I don't believe the EU will allow or encourage Greece to go to the IMF. I know and you know that the WB and IMF do more damage than good to struggling economies. The IMF dictates rules that are damagining like privitization, extreme debt reduction, and elimination of social programs. This is why France and Germany will be hostile to an IMF deal. It will make the econmic situation of Greece now and in the future - WORSE.
    I'm so pleased to see the EU financial wizards at work. If there is a way for Greece to restructure its debt, the EU financial wizards will find it, regulate it and make the process systemic.
    Whether you European Countries realize it or not, you are fortunate to have the guidance of the EU financial wizardry.
    Look for surprising, supportive tactics out of Brussels.

  • Comment number 29.

    I think this illustrates the point that when push come to shove it is really politics that could and should control the markets. All that is going on now is a form of cannibalism where the markets seek to eat the hands that sustain them. Without the state to protect their property, where will the rich go? Where will they be safe?

    All you need is a political class sufficiently determined to get as tough and as nasty as is necessary to do the needful. We won't find one of those in this country for now and that is for certain.

    So may I wish the Greeks and their allies all the very best in this endeavour.

  • Comment number 30.

    Ooodles. What a typical Stephanie Flanders word.

  • Comment number 31.

    As ever, incisive stuff Stephanie. But where does moral hazard fit in here? Looks like you are suggesting it's OK for a country to be irresponsible, because the international eurozone community will bail it out?

    As it happens, Greece is taking its medicine, unlike the UK, so they are taking a painful hit. But if Germany or, more likely, France, Italy or Spain decided to behave irresponsibly, aren't they too big to fail?

  • Comment number 32.

    Greece, I think, is in a far stronger position than even you Stephanie suggest.
    It's strongest 'card' is that it can show the rest of the world that the European Union cannot govern a single market.
    Greece cannot introduce severe 'austerity' measures, simply because the population will not accept it. There will be social unrest and the country will grind to a halt.
    If it doesn't introduce these measures, then the Germans (amongst others) will not be prepared to bail-out a fellow EU country.
    So, the Eurozone members are between a 'rock and a hard place'.
    So what is the answer?
    The EU governors will find some way, probably unknown to the rest of the world and only capable of being dreamed up in the offices of the EU in Brussels.
    Watch out for some kind of loan guarantee/bond share issue/country debt buy out/asian buy-in/chinese debt re-mortgaging that will leave the rest of the world thinking - "What the *****?"

  • Comment number 33.

    #2 It is a good argument but being a Eurosceptic (but not a rabid EU sceptic) I will disagree. Joining or not joining the Euro should be an economic decision rather than a political one and the economics do not stack up. A single currency zone by definition has a "one size fits all" monetary policy which means that unless your economy performs exactly the same way as the majority of Europe you end up with a monetary policy that does not work for you (see Ireland and Spain). UK economy has very rarely performed exactly the same as Europe for the simple reason it is structured differently and with different traditions.

    We do not have the same problems as Greece for the reason that most of our debt is owed in Sterling and if all else fails rather than default we could print more of the stuff.

    Now I am no fan of the rating agencies who have got things about as wrong as it is possible to be over the last 3-5 years but I have a lot of sympathy for them here. Greek debt, but for the actions of ECB, should rank as junk. It is denominated in a currency they do not control (so no printing press solution), without significant changes in policy there is little chance of Greece being able to pay the debt down and so far there seems little political will amongst the people to accept the necessary policy changes. Couple that with an inventive attitude to accounting and a refusal by Germany to support a bail out - and given some of the Greek political comments recently about the war can you blame Germany for walking away - and I suspect I would have a better credit rating if I had the Greek debts than they deserve.

    Greece has 2 choices; default or make serious changes in their lifestyles. As has been mentioned in the German papers why should we fund their lifestyles including ability to retire before 60 when our govt is raising the retirement age to close to 70

  • Comment number 34.

    "Several years ago (I think it was about 4) I predicted what I termed "Euro Crunch"."

    Tell me more.
    Do you mean Sterling depreciating some 20 per cent against the Euro (2005 £1 = 1.45 Euros; today £1 = 1.10 Euros).

    As a general rule the depreciation of a currency, sometimes a necessary shock absorber in the short term, indicates decline. Appreciation indicates the opposite.

  • Comment number 35.

    This type of analysis that Greece has cards to play in what is effectively is a game of poker between her and Europe has been articulated for some time now on the notayesmanseconomics web blog. It does appear that it is moving towards some sort of climax although that is now up to Europe.He is also critical of the ratings agencies.
    As Greece is establishing austerity measures there are potential implications for the UK as our fiscal deficit is similar. Perhaps we have more time as our national debt is comparitively but there is no room for complacency in my view...

  • Comment number 36.

    I have been told by a Greek friend (who actually lives in Greece rather than the City) that the strikes are done by Civil Servants alone and that the general populace by and large does not sympathise with them as they are viewed as the "non productive" part of that society.

    Having said that, its really sad that (as with most countries so far) even in Greece with its rebellious past the bill is being paid by the low & middle class incomes - once more.

    Perhaps a taste of things to come?

  • Comment number 37.

    And they say it ain't broke!

    Listen to what is being writen and said. It's so childish. "We're OK but you got no mates!" "you can't be in our club if you do that" etc. etc. Perhaps THE most stupid thing is a whole COUNTRY is dependant upon the likes and dislikes of a commercial agency who have proved themselves to be useless at doing what they have been paid to do!

    Isn't it about time that all of the governments told the capitalists to go away. Decided amongst themselves what precentage of debt they would forgive each other and then inform the capitalists of their decision. There's not a lot that the capitalists could do about it and all of us could view our economic futures from a relatively level playing field.

    Too simple? Well certainly for the financiers who thrive upon apparent complexity but a situation that governments will ultimately be driven to.

    KISS still stands the test. But not for the bankers who can only survive by 'black' arts.

  • Comment number 38.

    "Instead of fending off second rate insults about their past they should be offering up true leadership."

    Fortunately the Germans have moved on and prefer the softly softly approach - more consensual and less antagonistic.

    Alternatively the Germans have reverted to type (pre 1914) and prefer the softly softly approach - more consensual and less antagonistic.

    It would be very counter productive for the richest and most powerful nation (in terms of ideas) in Europe to boss events.

    The current approach will work - give it time.

  • Comment number 39.

    "We would loose our QE mechanism"

    The ECB has a QE mechanism too.

    It chooses not to use it for 2 reasons
    1. it is dangerous (as in Zimbabwe here we come)
    2. they don't have to use this nuclear option - there economic hole is not so deep.

  • Comment number 40.

    10. At 1:38pm on 03 Mar 2010, tFoth wrote:

    "I still believe that their sense of national pride and soidarity will mean that the Greek people will not allow Greece to fail."

    National pride? - So allowing financial gamblers to bankrupt your country from their globalised banking system and then taking the pain of that greed by depriving the next generation to pay for their excesses is national pride?

    If that's the case then call me a traitor to my country.

    By not allowing Greece to fail all the people of Greece are doing is showing more loyalty to the international banking system than their country.

    Fortunately the people of Iceland have already worked this out.

  • Comment number 41.

    Who referred comment #2 to the moderators?

    Did the speculators not like the comments made? - bit too close to the bone were they?

  • Comment number 42.

    11. At 1:38pm on 03 Mar 2010, Steve Jones wrote:

    "Your comments are naive in the extreme."

    ...but nowhere as near as the markets naievity if this is the first time they have realised there might be a hung parliment.

  • Comment number 43.

    #29 STANILIC,

    "All you need is a political class sufficiently determined to get as tough and as nasty as is necessary to do the needful."

    You can't say that on here or you'll get badly gummed by the likes of kevinb! After all, they can't comprehend why BA cabin crew would go on strike ,merely because they want to be consulted.

    If the results of their lack of comprehension was only going to effect them I'd gladly leave them to it. Unfortunately their myopia is going to injure us all.

  • Comment number 44.

    I've followed this whole debate about Greece's financial problems through various web-sites etc.
    My advice to Greece's Prime Minister is this:
    - resign your office.
    - jump on an airplane to the nearest island.
    - find a bar by the sea
    - get seriously drunk!
    It won't solve Greece's problems or save the Eurozone, but you feel a lot better!

  • Comment number 45.

    "A single currency zone by definition has a "one size fits all" monetary policy which means that unless your economy performs exactly the same way as the majority of Europe you end up with a monetary policy that does not work for you (see Ireland and Spain)."

    A single currency zone by definition has a "one size fits all" monetary policy which means that unless your economy performs exactly the same way as the majority of the USA you end up with a monetary policy that does not work for you (see Detroit and Kentucky).

    In what way is the Euro different from the Dollar.

    The "once size fits all" argument is weak but still the best argument the Euro sceptics can come up with.

    If there is an important difference it is that the Euro zone lacks fiscal union.

    This will be the next brick in the Euro project.

    Onwards and upwards.

  • Comment number 46.

    20. At 1:59pm on 03 Mar 2010, armagediontimes wrote:

    "No doubt some fix will be cobbled together to ensure the short term survival of Greece. It is largely irrelevant since the big European shoe to drop is Spain. Spain is beyond salvage and this will become apparent when market attention turns to all things Iberian."

    Oh this financial world loves it's short term fixes.

    We 'fixed' the credit crunch short term by reducing rates and printing money.
    We 'fixed' the housing price crash short term by subsidising the tax bands.
    We 'fixed' the car producing industry short term by subsidising used car sales.
    We 'fixed' the job losses short term by fiddling the figures so we count full/part time and reduced hours employment in the same bucket.
    We 'fixed' the sovereign crises short term by promising bailouts and promising savage spending cuts.

    Unfortunately a sticking plaster over a severed artery just won't cut it. However it doesn't stop the financial fantasists claiming the solutions are working.

  • Comment number 47.

    How many times can you restructure debt? How many times will small changes at the margins convince markets that there's been a major shift in the way an economy is run and that it is for once going out of the forest and not deeper into it, merely at a slighly slower pace? Greece is just the tip of the iceberg for the Euro anyway. Of all the countries in the Euro-twilight-zone, only Germany shows and real sign of life in any meaningful way. If others do, they are too small to matter. But even Germany's projected growth this year looks very anemic. Looming on the horizon are all those other economic problems such as the question of the banks that loaned all that money to East European countries that likely won't be paid back. And then there is the social upheaval. The high unemployment, the aging and even shrinking populations, the eternal ethnic and nationalistic friction (Greece's spat with Germany over unpaid Nazi debt hardly made matters better.) I'm sure the EU will pull out all the stops as each band of the storm arrives to weather it but in the end will it matter? It is so weak and incoherent at the core I don't see how.

  • Comment number 48.


    I'm really not interested in yet another Greek blog comment - very boring.

    What happened to an informed comment on sterling? effects on inflation? Inflation itself? or the prospect of more UK QE?

    What about the impact of the public sector cuts now happening across local/central government and the NHS?

    What about UK GDP and the estimate for 1Q 2010 and the estimate for the year plus also how accurate is it?

    etc etc.........

  • Comment number 49.

    24. At 2:10pm on 03 Mar 2010, Alesha Soba wrote:

    "the success story of Argentina shows that a country in trouble would be mad to honour its soverign debt to overseas bondholders"

    I hope their listening Alesha....I hope they're listening...

    The real reason there is panic about sovereign default is because a lot of hedge funds will go down the pan.

    They all operate with their Risk measurement of VaR - and the thin tailed VaR - which happens to be the same mistake LTCM made - which the FSA are aware of, but they live in the belief that 'only rich men put money into hedge funds'.

    ...clearly the FSA don't do their homework, I can see a pension fund from here which has hedge fund holdings....

  • Comment number 50.

    And if they are threatening to renege on their debt shouldn't Gordon Brown be declaring them a "terrorist state"?

    Oh, no. You only do that to a "friendly" country when you are sure you can get away with it. Riiiight. I get it.

  • Comment number 51.

    #18 Grim_Up_North

    I would just like to point out to regular posters that post #18 is a new Grim and is not me - my views are not so political as his/hers - in actual fact I think we would be where we are whoever had been in power - I think of politicians as politicians rather than one party or the other.

    Also I am not anti immigrant either although I would prefer 'immigration and integration' rather than 'immigration and segregation' as we have in many parts of UK.

    I do not agree with Brother Grim that our problems lie at Labour and immigrants door. I believe they are much more structural and strategic.

    Finally re Stephanie's blog - a country that can be bailed out is not strong - merely at the mercy of others - what is more intereting will be the reaction of the Greeks to the new budget cutting measures announced today. This may give us an insight into how the UK populace will behave come June or July when someone finally starts telling the country how ten years of binging on money we never had are going to be paid for.

  • Comment number 52.

    31. At 2:34pm on 03 Mar 2010, saneblade wrote:

    "As it happens, Greece is taking its medicine, unlike the UK, so they are taking a painful hit."

    ...and on what do you base that assumption? So far all there has been is talk, talk of cuts, talk of freezes, talk of reducing public sector jobs.

    Nothing has actually been done yet - you'll know when it has because you won't be able to get in or out of Greece as the whole country shuts down...

  • Comment number 53.

    This from bbc reporting of Greek austerity measures (which seem to have had some beneficial effect on the euro:

    "Despite the Commission's concerns, the chairman of the Financial Services Authority, the UK's financial watchdog, played down the importance of speculators.

    Adair Turner said it is more important to keep the confidence of long-term buyers of Greek government bonds.

    "It is important that even if we look at this issue we don't overstate it," added Mr Turner, who said that swaps speculators only comprised around 3% to 4% of outstanding Greek debt.

    "A fundamental issue that can drive volatility on spreads on Greek bonds is a whole load of long investors not being willing to buy.""

    Where are these long investors???
    I hope no UK pension funds?????
    and what credibility does Adair Turner have as a economic guru????
    Once again, no credible FSA policy on watchdog of UK banks.
    Mr Turner should try sorting out the resultant repossession actions of Lehmans brothers sub prime lending in the UK. The legal profession is lunching out on that particular misery for the next decade. Useless useless useless. Is the FSA on commission?

  • Comment number 54.

    Tax rises and spending cuts as is being instituted by Greece under pressure from the EU is exactly the OPPOSITE of what economists would recommend for an economy that is depressed and needs to be stimulated. This deadly combination is a death blow which will only deepen Greece's recession making it harder and harder to pay and leading to further cuts next time. This is what the death spiral is. It bodes ill for Euroland. What should be done is for the ECB to print more money along with serious reform eliminating wasted and corruption while creatig legitimate projects that stimulate economic growth in the private sector. This is not happening. Why would the IMF lend money to an economy that is being so badly mismanged? The IMF is nont intended as a charity to keep failed economies alfoat, it is there as a bride and assist to help alter the root cause of failure. There is no sign Greece is interested in this process, not really. Words are empty, where are the programs? Where are the firings of unnecessary government workers? Where is the prosecution of those who bled the Greek economy by allowing it to reach this point?

  • Comment number 55.

    The purpose of a rating agency if I understand it it to rate as a outside authority.
    To suggest that a agency "American" should base its ratings on a political agenda would be like asking a doctor to give a prescription and diagnosis based on the preferences of the patient. Nice but in the end bad for the patient.

    These problems in the end were created by the Greek government and voters I assume they did vote for their government. Much like General Motors in the US if the actions of a Company or Government are based on the idea that they are to big to be allowed to fail makes a decision mandatory. The EU needs to decide this issue. But sooner or later it will get back to the ballot box for voters all over Europe.

  • Comment number 56.

    to #33 Justin150;

    Please do not give me wrong, I think that a lot of people have many misconceptions about Greece/Greeks and their judgement is way off reality.

    I've lived roughly half my adult (& professional) life in the UK and half in Greece - I am Greek. Saying that Greeks retire at 60 is not really true and just builds on stereotypes.
    My honest opinion (based on my experiences so far - I'm 38) is that the average Greek saves alot more than the average Brit. Furthermore, most Greeks own their houses. In fact, the only thing that you can accuse Greeks of is that they do have a fixation with owning their property.

    Nor the lifestyle is that different to what you have in the UK. If you base your judgement on holidays etc, I don't blame you. It is certainly the case for the German who are far less adventurous than say Greeks or Brits and rarely venture outside their country to work etc.

    60 may be a valid retirement age for Greeks, but only for manual labourers etc. They will have been contributing in most cases for 40+ years in the system before being eligible to retire and frankly, I can't see how someone over 60 can contribute in a construction site at 40 degrees. And unlike most other professionals in Greece, they do pay their contributions because of the way the system is structured.

    Personally, I will be able to retire at the grand age of 65 (reduced scheme) or if I make it at 70 (full pension). I am a mechanical Engineer by profession, mostly dealing in housing projects.

    Also there is the case of the bloated goverment. This is true, but please bear in mind that wages in Greece are quite low compared to the UK whereas taxation is really the same.

    More to it, the reason the pension schemes in Greece are failing and politicians are so eager to declare "national emergency" is that the state itself has raided them beyond belief.

    The state for the past 25 years has been actively been obtaining "loans" from NI contributions, essentially our pension money. People that designed the pension schemes 25-30 years ago were not stupid, their plans had contigencies built-in. But when a state acts like a big bully and basically robs you of your money and then comes back to say that your pension is at stake basically is adding insult to injury.

    Add to that the fact that many people work 2 jobs to make a living and you'll see that its not unfair for people to go on strike.

    BUT.... only the public sector will go on strike, as only them they can afford it. Its quite easy to blame them and call them lazy or whatever, but it is far from the truth.
    When two persons go to work, one on foot and the other on a bicycle, what one should be looking at doing would be to give the 1st guy a bicycle, not take the bike away from the 2nd. Silly example perhaps, but one that accurately describes the situation.

    My parents are civil servants. They work from 8 to 4 - 8hrs a day, 5 days a week. Their anual income after tax is just under €18000. They are 5 years away from retirement at the age of 65, at which point they would have contributed to the system for 45 years. Their pension will be about 75% of their current wage. Do you find it excessive?

    Now look at my case. I worked for a Ltd company for 3 years in Greece before deciding to try my luck here. Annual income (after 5 years of experience): €14000 after tax. 5 days a week. 9 to whatever my boss liked. Admitedly, lots of it is down to the chaotic Greek way of working and thinking, but I assure you, when in Greece I trully work long hours.

    Its all these things and then some more that made Greeks angry about this whole crisis thing. Greece may go on strike, but please remember that the current goverment enjoys a 70% acceptance rating. An oxymoron perhaps but one that describes the situation. A public sector fearful of losing their relative privileges and a population that is tired of inefficency and corruption.

    Having said that, I should point out that at least in the case of Greece, most if not all major scandals had a German finger behind them (Siemens, Thyssen Krupp, Blohm & Voss and many more).

    I find it very innapropriate when in discussions the corruption issue creeps up, as in my personal experience corruption is evrywhere in Europe at this stage - admitedly less so in the UK.

    Sorry for the legth of my post and my simplistic English (I'm good with numbers though!), I'm afraid I may have added more confusion.

  • Comment number 57.

    34. At 2:41pm on 03 Mar 2010, Richard Dingle wrote:
    #16 "Several years ago (I think it was about 4) I predicted what I termed "Euro Crunch"."

    Tell me more.

    Do you mean Sterling depreciating some 20 per cent against the Euro (2005 £1 = 1.45 Euros; today £1 = 1.10 Euros).

    Richard, that is one facet of it. Thinking about it I first went to Thailand around 2003 (so 7 years - where did the time go). Back then I got well over 70 THB to the pound. I bought a lot of THB, S$, and a few other Asian currencies. Now you would be lucky to get 50 THB to the GBP. Not good.

    But I think one reason why I left was not so much because of the predicted currency decline, but the long term social decline I saw everyday in UK. The reason that social decline is so bad is because it undermines the wealth generating capabilities of a country. Long term that can only lead to very bad things.

  • Comment number 58.

    #38 Richard Dingle. You appear to have no idea as to the gravity of the global situation nor the power of the forces ranged against you.

    Germany is surrounded by terminally bankrupt nations - the whole of the former Club Med, the entirity of the ex Soviet states to the east, and the offshore disasters that are the UK and Ireland.

    Over the pond the US lurches from crisis to crisis staggering toward the day when the US$ implodes or explodes.

    Meanwhile the master confectioner stirring ever more toxicity into the mix continues to bestride Wall Street and the City ensuring that there can be no way out for any except the annointed few.

    Germany is incapable of bailing out the full range of its bankrupt partners and neighbors. It is not necessarily incapable of acting to root out the corruption that is rotting away the fabric of society and which, if left unchecked, will lead to the destruction of Germany itself. No man is an island!

  • Comment number 59.

    It seems to me that the Greeks are blaming the messenger.
    Never mind the rating agencies, we can all see that they have been living beyond their means. I wouldn't lend my money to them.

  • Comment number 60.

    51. At 3:57pm on 03 Mar 2010, GRIMUPNORTH77

    There's only 1 GrimupNorth and always will be...

  • Comment number 61.

    The quality of English in this article is not acceptable. Spelling mistakes, sensationalism and cliché proliferation may be acceptable in the Daily Mail or City A.M. but the BBC must demand better from its Economics Editor.

  • Comment number 62.

    #45: America being a single currency union does indeed suffer from the same problem but they have a number of counter balances which EU does not have:

    1. They are a full political union with a common legal culture - EU is not and does not.

    2. Despite being a full political union each state has considerable freedom in how it implements tax and social policies, EU states do not have that luxury, this gives US states far more flexibility to deal with an inappropriate monetary policy by changing tax or social benefit policies

    3. Much greater movement of labour across US state boundaries than EU state boundaries - which again gives a way for the economy to deal with a "wrong" interest rate policy.

    4. Unlike EU, in the US, cities, counties and even states can and do go bust and default on borrowings

  • Comment number 63.

    17. At 1:47pm on 03 Mar 2010, rbs_temp wrote:

    "#1. John_from_Hendon wrote:
    I really shouldn't need to write that as it is obvious, but really shouldn't we be more concerned with our own econo/political malaise.

    Of course we should be more concerned with the state of our own economy, and I'm sure we all are, but that does not mean that we cannot also be interested in and discuss other economic issues."

    The point I was making is that Greece has friends in the Eurozone - we have none! Suggesting that being inside the Eurozone is a good thing (to hammer the point home) but we are outside!

  • Comment number 64.

    German hyperinflation in the early 1920s is also cited as "something to avoid at all costs". However Germany was soon powering ahead after that, unlike the victors who didn't cleanse their economies. Certainly default and high inflation are things to claim that you want to avoid...

  • Comment number 65.

    The Greeks have already have massive strikes over the deficit and the pain of dealing with it.

    Iceland has gone, Portugal, Greece, Ireland, Italy, Spain and the UK are going to follow, until someone, somewhere makes all the people of the countries realise that regardless of who's fault it was, it is going to hurt big time to get out of it.

    Strikes will make not a jot of difference. Debt doesn't go away unless you go bankrupt. In a way that could be easier for Greece (and the others) because at least then they can only pay for what they have money to buy.

    Of course, France and Germany won't like that, but then they are more than a little arrogant, preaching to Greece when they appear to be the only countries to benefit from the Euro/Eurozone. Well, let them keep a happy little Eurozone between them. They are too powerful and it would be good for them to learn a little humility. Then all the 'poor' countries can get back to helping each other, instead of trying to stab each other in the back.

  • Comment number 66.

    #54 MarcusAurelius11. Yes indeed; Where are the prosecutions? Why are some of the suspects being sheltered in the US? Where is the outrage? Where is the demand for justice? How many people have offered you a currency swap at LIBOR minus 16.77%? Would you suspect there may be something awray if they did?

    A lot of people aint gonna get no justice tonight.

  • Comment number 67.

    It seems to me the Greek parliament is 'agreeing' to austere measures in order to placate 'the markets/speculators' rather than the ECB or its own citizens. Once placated they (the spivs) will simply move on elsewhere (PIIGS?) looking for further easy pickings.

    Financial gangsters are now clearly willing to destroy entire Nations in pursuit of their own greed and amusement whilst governments seem unable or unwilling to do anything about it.

    Silly old me, and I though society mattered...

    So, what is the point of education if all the world's just a casino?

  • Comment number 68.

    New twist in the Greece saga

    Nana Mouskouri (for those who can remember her singing!) offers Euro MP pension to greece....

    Absolutely priceless (so to speak). You couldn't really make it up.

    Perhaps given the BBC cuts, they could commission a new cheap soap opera entitled 'Grecian 2010'.......done in a cheesy advert style......

  • Comment number 69.

    "#38 Richard Dingle. You appear to have no idea as to the gravity of the global situation nor the power of the forces ranged against you."

    Check my posts again. On the previous blog I posted...

    "Turning to the doomsters that predict another great depression.
    You are right. But it will not apply to the emerging economies; they have 'decoupled' and no longer need the West.

    The salient characteristics that mark our current situation will be obvious when we look back in 20 years time; while we (the West) were taking things for granted drugged by a cheap money (Greenspan,Brown, et al) boom / bubble the rest of the world moved on.

    We are left with huge trade imbalances, slow or zero growth in the old economies and healthy growth in the new economies."

    We are all up the proverbial creek but some (UK) more so than others.

    Thats all.

  • Comment number 70.

    Greece will not go bankrupt but they will have to cut their public sector debt drastically, the Euro zone will ultimately bail them out.

    The UK with a new labour government won't have the benefit of the Euro zone backing. we will be own our own , until the IMF steps in , providing we comply with THEIR conditions.

  • Comment number 71.

    "but they have a number of counter balances which EU does not have"

    Three valid points that I have to accept.

    However the Euro is still a work in progress hence my reference to fiscal union.

    There is a determination behind the Euro that makes me believe that this crisis will accelerate its development towards the finished article.

  • Comment number 72.

    #64 Robert Smart,

    "However Germany was soon powering ahead after that,"

    Do you really not know anything about history! Go and look how Germany 'powered ahead' after hyper-inflation.

  • Comment number 73.


    Don't bring me into your deluded fantasy world..

    Public sector workers should have their salaries cut with the exception of the armed forces, as the rest of us pay their wages.That is my view.10% cut across the piece, with a genuine cost cutting drive would cut the defecit, without impacting on services.

    Do you understand that point?We pay their wages

    Ba Cabin crew work for a private company, so what they get paid is nothing to do with me, as I am neither a customer or a shareholder

    Do you get the difference?

    For what it is worth I think Ba are far more to blame in this instance, although counting the votes of ex-employees in the strike ballot before Christmas, was spectacular in it's stupidity

    Striking will possibly push the company over the edge...what I would call lose/lose

    Please feel free to continue writing your drivel, free speech etc, please do not try to guess my views in the future

    You are not very good at it

  • Comment number 74.

    All the talk about putting the Greek house in order, increasing competitiveness, getting out of a contraction spiral caused by debt, totally neglects the realities of the Greek economy. Greece will contract more with the austerity measures. The real question is, how will Greece dig itself out? Greece has an undiversified economy, it's very vertical with shipping and tourism comprising well over 50% of GDP. Sure, they can improve their tourism offerings, they can make things cheaper too to drum up business, but both these sectors will not come back until the world economy comes back. Both rely on external factors, and both bring lots of outside money into the country. When Europeans talk of competitiveness, they tend to think about high-tech or engineering--it's a term for Germans, really--but they neglect that other countries have niche industries which can get them by. In such small economies, you really do need to run surpluses, but the EU partners need to realize that Greece can't turn things around easily, and they should stop looking down their noses at ordinary industries such as shipping. Put it this way: if the entire world bought their marijuana from a single nation, that nation would be filthy rich.

  • Comment number 75.

    Back to the article...

    Greece is indeed not called the cradle of civilisation for nothing

    Thank goodness we are not in the Euro, so we do not have to join in the solution currently

    Without the Greece situation being resolved, nothing else will move in my view

    They certainly won't respond well to being bullied

    Especially if Turkey try to make Political capital out of it

  • Comment number 76.

    Well said. I am laughing aloud with the ignorant posts of north Europeans full of cliches, misconceptions, stereotypes. Their journalists are not much better. A very small example: they call the existence of ~14 salaries (the last two are not full salaries anyway) byzantine as if it is particular trait of the system in Greece. It is not, I know very well that exists in other EU countries. It is just that it is unusual for the Anglosaxons. They are ignorant and they talk for things that they do not know about with the typical arrogance of North Europeans. However on arrognace no-one beats some Americans....

  • Comment number 77.

    265 From the previous blog, to ensure you see this!


    You are one tiresome blogger

    I called this economic depression in 2008, well ahead of most and in none of my blogs in here have I said anything to the contrary

    No wonder you get accused of making things up by others

    If you think we should borrow even more when we are up to our necks in debt, then you are the one who needs to learn something

    I have never seen you post anything other than self-righteous doom and gloom, with your anti-Conservative chip shining bright on your shoulder

    Wouldn't be so dull, if you had a sense of numour, or one single original thought

  • Comment number 78.

    "Public sector workers should have their salaries cut with the exception of the armed forces, as the rest of us pay their wages"

    2 points

    1. Why except the armed forces. Is it because they have guns or are you 'hiding behind the flag'.

    2. Cuts are cuts. Cuts in the public sector means less money spent in privately owned enterprises.

    To cut or not to cut or to borrow or not to borrow.

    A bit late - like rearranging deck chairs on the Titanic.

    For what its worth I err on the side of CUTS - lets get the pain out of the way rather than delay.

    Debt is nasty and inhibits growth whether individual, corporate or sovereign.

  • Comment number 79.

    #69 Richard Dingle. What emerging economies do you have in mind? Maybe China sitting on upwards of $2 trillion of soon to be worthless US T Bills and an economy designed and structured to export rubbish to those who buy it because "they deserve it"

    You csn go through every country in the world and you will find that all roads lead to Washington, Wall Street and the City. De-coupling is just another myth along with the "Japanese miracle economy" the "Celtic tiger" and so much other hogwash peddled by the media to impede the ability of people to see the truth.

  • Comment number 80.

    @71. Richard Dingle wrote:
    Three valid points that I have to accept.

    Three valid points? I think you need to take a closer look... I only count 1.5 points which are valid.

    Only point three is fully valid along with (partly) point one (USA is a full political union) but it doesn't have a common legal culture (Louisiana is the ugly duckling of the US legal culture) Both point two and four are untrue (I find it weird that a sovereign state has less freedom then a US State in taxation) likewise the the entire Greece going bankrupt = the end of the Euro is a hyped up media speculation.

  • Comment number 81.


    Because they risk their lives in a way I feel needs to be recognised. We need to treat them with some respect, restore the covenant

    If we are going to reduce the debt, or deleverage to be anal, then it will take money out of the economy

    No other path

    I have nothing against employees in the public sector, this is my preferred option, though

    Medicine now, pain now, better sooner

    Delay the medicine, pain now, even more pain later, worse medicine..that's my view

  • Comment number 82.

    What I want to know is what happened to Dubai's debt problems? Greece came in hand for them.

  • Comment number 83.

    This crisis is showing the world just how weak the euro zone is and what a fallacy it was to create it. A single currency is only as strong as it’s weakest member, and the euro zone has several weak members. The euro zone will continue to lurch from crisis to crisis without solving the structural weaknesses that lie at the heart of the structure. Ultimately it will fall apart under the strain.

    Just how many euro zone countries are complying with the rules of running no more than a 3% deficit? That was the limit set down in order to retain the credibility of the currency wasn't it?

  • Comment number 84.

    "an economy designed and structured to export rubbish"

    Behind the curve.
    China is not far away from becoming a high-added value exporter.
    It has the education system and skill of its people without the 'inconvenience' of the democratic process.

    As for Japan it is well placed to spring forward - huge R&D spend and technological edge. Sovereign debt levels are massive in Japan but held by Japanese savers.

    I fear for the West not the East.

  • Comment number 85.

    "Because they risk their lives in a way I feel needs to be recognised. We need to treat them with some respect, restore the covenant"

    I agree.

    Of the whole rotten edifice that is UK PLC, bankers, MPs, the Upper House, etc, our troops set a shining example of professionalism, bravery and self-sacrifice.

    We need them back home with guns cocked.

    Is there not a Cromwell amongst them.

  • Comment number 86.


    Does anyone in the EU obey the rules..appart from us?

  • Comment number 87.

    "The euro zone will continue to lurch from crisis to crisis"

    Some lurch.

    Do you mean lurching from 1 Euro to 0.68 GBP in 2005 to 1 Euro to 0.90 GBP today. When will 1 Euro = 1 GBP - sooner than you think.

    Some lurch - thats a 20 per cent lurch.

  • Comment number 88.


    It nearly was at parity not so long back

    Not sure I agree with your analysis just yet

  • Comment number 89.

    #84 Richard Dingle. Perhaps you have missed something. The west is irredeemably insolvent. Who then is likely to be in the market for Chinese "high added value" goods?

    It is true that Japanese bonds are held by Japanese savers. They have been buying these bonds to fund their pensions. Unsurprisingly these people are ageing and are now starting to cash in their savings. This explains why Japanese pension funds have, for the first time ever, recently become net sellers of Japanese bonds.

    There is no way out for Japan.

    East is East and West is West and never the twain shall meet - except at the very end where we have synchronised meltdown!!

  • Comment number 90.

    " The west is irredeemably insolvent."

    Opinion or fact.

    Insolvency leads to bankruptcy which leads to a new start.

    There is no 'the very end ' unless of course we are talking about the universe.

    What 'synchronised meltdown' do you have in mind.

    The West needs to change. For that to happen it needs to accept change is necessary which in turn means not underestimating where we are.

    A Red Queen game; the West will do well if it keeps up over the next 100 years.

    I doubt that we are all going to vaporise and vanish in some vortex.

  • Comment number 91.

    "Not sure I agree with your analysis just yet"

    I like the 'just yet' bit; give it time.

    In the short term currencies wobble all over the place. Medium and long-term trends are the ones to watch.

  • Comment number 92.

    Austrian Radio website quotes Trasparency International.

    It is reported that corruption is part of everyday life in Greece. Greeks pay on average 1,355 Euros (I take this to mean on bribes each year.)

    Last year it is claimed that 790 million Euros were paid in bribes by Greek "families." (I don't know how to translate the word "Haushalte".
    Families is pretty near.)

    According to Austrian Radio according to Transparency International corruption is partly responsible for the Greek financial situation. Bribery is a daily part of business life.

    The 1,355 Euros that Greeks pay in bribes each year e.g. to accelerate the issuing of a driving licence or a vehicle licence, for building permission and for the manipulation of the results of a tax inspection.

    It goes on, but I think you get the picture.

    I could not possibly wish to be in a political union with the continentals.

  • Comment number 93.

    #90 Richard Dingle. The irredeemable insolvency of the west (including Japan) is an objective fact. You can look at any metric you want and the answer is always the same and always clear. Only spin, hype, sophistry and dissembling keeps this fact hidden from general view.

    Does insolvency/bankruptcy always lead to a new start? Not for the Romans, and not for any of the other multiplicity of "vanished" civilizations.

    Did you know that Iranian leaders spent the weekend in Damascus where they discussed their capabilities to realiate should they be subject to a first strike attack by the US or one of their proxies.

    It would not appear prudent to dismiss as fantasy that many will be vaporized. It is perhaps more sensible to ask how many people you think should die in order to mask the truth from the sensitive eyes of western consumers. If the answer is zero then perhaps you may consider attempting to do something about it.

  • Comment number 94.


    I agree

    Part of the difficulty currently, is that the long term trends could go almost anywhere

    One thing, I believe to be pretty obvious, is those expecting a rise in interest rates will be sorely disapointed...what would it achieve for a start? Beyond taking even more money out of people's pockets

    In addition, it is extremely unlikely whilst further QE remains possible/probable depending on your view

    My pension is heading for commodities funds in metals..whilst it still has some puny value

    It will be interesting gto see how the three debates go on TV

    I would have thought Cameron should do rather well

    Clegg can also be influential if he is clever enough

  • Comment number 95.

    Greek PM was adamant and put the cat among the pigeons: austerity measures was what IMF recommended also and it is now EU's turn, we need cash and we cannot borrow from markets at current interest rates (7%), if EU does not help with a loan at a reasonable rate (I think around 5%) no hard feelings but we have no other option than to go IMF which is offering us money immediately.
    I think that this is an important development and puts pressure to Germany. If Germany refuses, Greece cannot be accused that it will turn to IMF.

  • Comment number 96.

    "It will be interesting gto see how the three debates go on TV"

    McBully will give them both a good thumping and then return to No.10 and continue mortgaging our future.

    No happy endings unfortunately.

    Best course of action is to retreat under the duvet with a single malt until its all over.

  • Comment number 97.

    On the wagon...Lagavulin if I was not

  • Comment number 98.


    It should be within this article, ih you wish to improve your English

  • Comment number 99.

    Given all of the investment opportunities in the world including so many in China, Brazil, India, the US, Canada, why would anyone in their right mind invest in Europe in general and Greece in particular? The more trouble it gets into, the higher taxes will go. Its currency will fall, its interest and inflation rates will rise, and it will suffer social unrest. Where is the attraction for private money. Government handouts and bailouts can only go so far. The rest is up to those who create the climate that would want to make people trust and expect that there is profit to be made with acceptable risk. Europe is headed in the opposite direction.

  • Comment number 100.

    If you think that Greece's cards are are blackmailing the EU then you are far from the truth.

    I will not get tired of saying it: while grosso motto financial rules apply to Greece just as to any other country, Greece's case has little to do with economy. Nobody of you asked here why on earth these US agencies did not dowgrade Greece 10 years ago when it was getting huge loans to organise the Olympic fiestas at a final cost of 4 times (at minimum) the original... And why it happened only when the new US-passport holder Papandreou the 3rd governement was created out of forced elections 3 years earlier than the expected date and after a year of "technical chaos"... Well, I thought financial analysts comprehended at least partially such questions but I was wrong.

    Greece has far stronger cards than these. It has the Russian gaz pipeline. It has its own right to augment its sea-space to 12miles from coast. You just cannot imagine how minor is all that argumentation about IMFs, the rates and the % in a country that can turn upside down the table in a click. All it takes is 6 miles more and a tube.


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