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Greece: Ceding defeat, but not (yet) default

Stephanie Flanders | 13:05 UK time, Friday, 23 April 2010

The Greek prime minister has given in to the inevitable in formally calling for help from the IMF.

Greek flag flies from the roof of a building as the house of Parliament, AthensBut in financial crises, a few days delay can be a dangerous thing. What the markets considered inevitable last week may not be enough to save Greece today.

The euro has risen on the news, as you would expect. The Greek government and (hopefully) the eurozone appear to have decided that Greece's problems won't improve until investors actually see official money heading to Athens.

The questions will now turn to when, exactly, Greece and the IMF will be able to reach a deal; what the conditions will be; and whether the amount of money involved can possible be enough.

There are logistical issues over the next few days, because many senior Greek officials are in Washington for the IMF meetings, whereas the IMF negotiators are already in Athens. But of course those can be overcome.

IMF officials have been thinking about Greece since at least the start of the year: it won't take much to have a Letter of Intent on the table ready for the Greeks to sign.

But it will matter - in Greek political terms - what is in that deal. There is plenty of popular discontent already about the cuts that the government has committed to make over the next few years. The worse the medicine, the more that investors will doubt the Greek population's ability to swallow it.

Yesterday, Eurostat revised up its estimate of the Greek budget deficit in 2009, 13.6% - up from 12.7% before. It's amazing to think that only last summer, the OECD was writing economic updates on Greece which warned that the deficit "could rise to 6% of GDP in 2010". It only goes to show how fast these situations can change.

Will today's news slow down the pace a little? Perhaps. As I noted, the euro has risen on the news. The gap between Greek and German long-term bond yields has narrowed slightly, and the cost of insuring against a Greek default has fallen by about half a percentage point.

But the implied risk premium on Greek sovereign debt is still much higher than it was only a few weeks ago.

Back then, a clear signal of intent by the Greek government that it would seek to borrow upwards of 40bn euros from the IMF and the rest of the eurozone would probably have bought the Greek government a lot of time.

But as I noted last week, there is now plenty of room for investors to doubt whether a package of that size will be enough.

Update, 18:17: I've now spoken to senior G7 officials now meeting in Washington. The message from there, as you'd expect, is that right now, a default by a sovereign European government is "unthinkable".

At such a delicate time, the risks of contagion - and higher borrowing costs - for other countries are just too great.

For senior officials outside the eurozone, the Greek problem looks manageable. They just wish everyone would get on and manage it. Privately, they are frustrated that it took Greece so long to formally ask for support. But that is not only Greece's fault.

As I reported a few months ago, the Greeks have wanted to involve the IMF - in some way - for months. It was other eurozone governments, notably France, that initially wanted to keep the Fund out.

Privately, the Greek finance minister has been telling colleagues that Greece would have to go to the Fund since January.

Now it's finally happened. And the clock is ticking.

Several eurozone governments, including France, need parliamentary approval for their part of the deal. That means the first or second week of May, at the earliest.

The Greeks will want the IMF piece of the deal to be in place before that, and definitely before another great wodge of sovereign debt needs to be refinanced around the 19th of May.

As I predicted last week, it now looks as thought the IMF piece of the programme will be larger than initially suggested - in the region of 20bn euros. That is one cost of so many months of delay. It may not be the only one, for Greece or the eurozone.

Comments

Page 1 of 3

  • Comment number 1.

    " only last summer, the OECD was writing economic updates on Greece which warned that the deficit "could rise to 6% of GDP in 2010". It only goes to show how fast these situations can change. "

    ... when systematic fraud at government level is at last exposed. This sort of thing is endemic in Greece and should come as no surprise. Thank goodness we're not in the Euro.

  • Comment number 2.

    Are we nearly there yet? - I've been predicting this for ages.

    Let's throw a few facts into the pot which Stephanie has ommitted.

    France haven't actually agreed their part of the funding (at the time of writing) and nor have the Germans - a combination of $19 Billion of the bailout money.

    The Greeks have a an issue to get out some $11.4 Billion in Bonds to complete by the 19th May. The Greek PM reckons it will take 2 weeks to agree the details of the bailout and 3 weeks before they see the money.

    The Greek bond market has disappeared - why?

    Well the IMF (and possibly the EU) have placed themselves as 'preferred creditors' - which means all other bond holders will have to wait. Would you be buying into this situation as an individual investor?

    The fear has already spread - an increase in Irish, Italian, Portuguese and even 'relatively safe' Spainish CDS spreads yesterday.

    The Greek bond price may have risen on the bailout news - but then didn't it rise when:
    1) The possibility of bailout was announced
    2) The bailout conditions were revealed

    ...and what happened straight afterwards - do you really believe it's 3rd time lucky?

    ...oh and the country is on strike again - it seems that the Greek people are none too keen on IMF stormtroopers imposing draconian measures on their country.

    After the re-writing of Greece's actual GDP - the markets will be worried that you cannot trust Government supplied GDP figures - for that increased risk they want a much higher premium.

    This is like a slow and painfull death - every week there is a new hope to prevent the inevitable - soon followed up by a reality check for those misguided souls.

    Make no mistake - this is a default in all but name. Greece cannot hope to pay back the EU / IMF loans and their Bonds with the incredibley weak growth they have combined with a restrictive currency that won't allow them to devalue and repair their balance of payments.

    Want to know how bad it is for Greece?

    Exports $18.64 billion (2009 est.)
    Imports $61.47 billion (2009 est.)

    Negative growth, mounting debts and increasing interest payments.

    If this were your neighbour - would you lend him money?

    It's all over bar the shouting.

  • Comment number 3.

    Whilst Greece had its own problems of corruption and inadequate tax from the high earners, what has happened is a coup for Wall Street, the very same firms that are under investigation held a gun to the head of Greece and made it blink.
    Now all the wealth that Greece has will be sucked out leaving the population and its childrens children to pay for the big bonuses of the banking fraudsters, hedge funds and not forgetting the Banking elite oops I meant IMF

  • Comment number 4.

    And not a single banker in jail. It is not just that Captialism can spur greed to unprecedented historical levels, but that greed can corrupt governments and allow those who diminish both public and personal wealth to walk away with obsence pockets full of cash and not be held accountable for such actions.
    The reluctance on the part of governments to install controls over banking that will protect the saving and investments of citizens is the most disgusting example of governmental corruption present.
    All elections are talking about plans for "recovery" and nothing is being put foward about protecting the public and national economies from the banking cabal and its ability to create these conditions. Everyone wants to pretend this is a technical issue when it is an ethical and legal issue. Your governments do not represent you.

  • Comment number 5.

    Why does the European Central Bank not just print 300 bn Euros and buy all of the Greek debt back and call it QE? It seems to work over here; the Bank of England prints £200 bn and not a single question is asked about it during the election campaign. I think the last time you mentioned QE in your blog was November.

  • Comment number 6.

    What occurs in Greece is going to be here in 6 months. Watch the dominoes topple: first Greece then Spain and then the UK.

  • Comment number 7.

    "Yesterday, Eurostat revised up its estimate of the Greek budget deficit in 2009, 13.6% - up from 12.7% before. It's amazing to think that only last summer, the OECD was writing economic updates on Greece which warned that the deficit "could rise to 6% of GDP in 2010". It only goes to show how fast these situations can change."

    That's one point of view.

    Another would be that economists (and I exclude none) just make it up as they go along and expect to be paid for doing so.

    If I (a software developer who works on software that keeps the country operating) had such an attitude...I for one wouldn't fancy getting on a plane...or driving through traffic lights...or crossing the channel etc.

    Must be nice to have a job where you get paid lots for being wrong...again...and again...and again.

  • Comment number 8.

    'Whether the amount involved can POSSIBLY be enough.' You're welcome.

  • Comment number 9.

    Greece lacks of foreign currency for long years. Since 1980, Greece has had this problem and never improved it. Until she took a chance to join EU to try to use EU to support her poor economy and finance.


    In fact, Greece is hard to promote her GDP and tax to decrease deficit of budget due to bad political management in government and in financing. The country's credibility and ability of world trade competition are very low among European countries.

    Now she is the membership of EU. If EU doesn't save Greece, Greece would be bankrupted. If EU wants to save Greece,EU must pay huge amount to Greece. Greek PM now transfers her shambles to EU for help.

    How to save Greece? EU must ask Greece to cooperate with EU and IMF to go the most moderate way. I don't think money is everything. Many ways can resolve the Greek bad Finance.

  • Comment number 10.

    Stephanie,
    I do enjoy your blogs but would you kindly remember that we don't all have PhD's in Economics. Could you explain in more detail some of the jargon, acronyms and assumptions that you use? I want to have a better understanding of this crisis but I don't feel that much more enlightened after having read this piece. Kind regards, Frank B (Australia).

  • Comment number 11.

    It may be time to rethink the global economy. Certainly was profitable for bankers and big business but everyone else has been subjected to losses of personal wealth. Nations became dependent on cheap imports and when the fraud of the bankers came home everyone was left hold empty bags. It is easy to point to a country like Greece and balme poor budgeting by the government but the same problem exist in almost every country to some degree. Nations need to protect their own interest and the interest of bankers is not the interest of nations. The bankers have corrupted most governments so until that matter is resolved nothing should be expected to change. As the Kung-Fu-Tze aptly said...clean in front of your own house and the world will be clean.

  • Comment number 12.

    .........just watch what happens now! Greece will hand over the reigns of the economy to the ECB and the IMF. They will introduce draconian measures which as sure as night follows day will result in the type of civil disturbance not seen since the student riots in Paris in the 60's. The Greek government will collapse in the face of civil disorder and public service strikes. The economy will collapse as it dawns on the Greek people that a Euro loan is simply unaffordable. Sovereign default followed by a swift exit from the Euro. Back to the drachma and economic management by devalaution, same old same old. For Greece, read Portugal, for Portugal read Spain, for Spain read Ireland, for Ireland read.......

  • Comment number 13.

    Looks like Ireland's next. Bertie Aherns true legacy and bankrupted nation.

    Not sure about the rules about posting links, but If I may, heres a pretty good article by an economist over here. He's been pretty accurate so far.

    http://www.davidmcwilliams.ie/2010/04/12/embrace-the-unpredictable?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Davidmcwilliams+%28DavidMcWilliams.ie%29

  • Comment number 14.

    I think tou are missing an important point :
    The 3,9 billion € promised yesterday by France + the billions of Germany to Greece they are not going to be taken from the pockets of the taxpayers of these countries BUT will be borrowed by the Banks and the funds ( the same ones which have been saved by these EU states , swallowing hundreds of billions , in order , shamessly ,to pay extravagant bonuses to their golden boys) at an interest rate of 1,37% and then borrow Greece at 5%!
    That, I call excellent business!
    So , please, stop this hyporitical tears!
    Constantin

  • Comment number 15.

    I'd just like to thank the Greeks for trashing their economy marginally faster than our government has trashed the UK's fiscal position.

    Running an annual deficit that's bigger than your entire income tax take doesn't seem to worry our politicians - at least not into any meaningful action.....

    Hopefully the extreme pain about to be felt by ordinary Greeks will be a timely lesson for the UK electorate that money dished out by politicians in your name isn't going to be paid for by the tooth fairy.

    Sorry Greece

  • Comment number 16.

    I was hoping that the Greek government would threaten to default, to withdraw from the EU and forge ties with Russia, China, Iran and Turkey (!) The Greek people have more options than they think! Why are 'investors' more important than real people?

  • Comment number 17.

    #2. writingsonthewall wrote:

    "I've been predicting this for ages."

    You've been predicting lots of things for ages - mass civil unrest, FTSE at 3500, worthless currency, double-dip recession, the collapse of capitalism...

    Good to see you got something right at last. (Even it is is blindingly obvious). :-)

  • Comment number 18.

    4. At 1:47pm on 23 Apr 2010, ghostofsichuan wrote:
    And not a single banker in jail....

    ....All elections are talking about plans for "recovery" and nothing is being put foward about protecting the public and national economies from the banking cabal and its ability to create these conditions. Everyone wants to pretend this is a technical issue when it is an ethical and legal issue. Your governments do not represent you.


    Yes, well, this is the price we pay for free markets and the corporatisation of the world that increasingly limits national governments in their economic endeavours. The world outside China is actually run by about 20 people, none of them politicians.

  • Comment number 19.

    PIIGS can't fly...

  • Comment number 20.

    @Frank Brennan

    The bankers saw an opportunity to defraud ordinary people. They took it and ran.

    Is this clear?

    HTH.

  • Comment number 21.

    Will Greece hurry up with announcing the inevitable default and crashing of the EURO as I need to book my summer holidays?

    Please ...

  • Comment number 22.

    Thanks for this update Stephanie. I would however suggest you revisit the section which says
    " It's amazing to think that only last summer, the OECD was writing economic updates on Greece which warned that the deficit "could rise to 6% of GDP in 2010". It only goes to show how fast these situations can change".
    Because the numbers did not change by chance they mostly happened because the previous Greek government misrepresented the figures and left the new one to sort out the mess.
    Sadly for those who may think this is an end to the saga it may only be a new stage as I have read notayesmanseconomics web blog analysis of several flaws in the plan, which the markets will get around too sooner or later.

  • Comment number 23.

    How much are we putting into the inevitable bail out I know G Brown promised us that we would not have to contribute but G Brown says lots of things

    Who is going to bail us out ?

  • Comment number 24.

    Everyone knows Greece is going to default, it's embarassing to our intellignece to suggest otherwise. Greece should be turfed out of the EU as an example, so other countries know honesty is the ONLY policy. Greece is a joke, with a very bad punchline.

  • Comment number 25.

    17. At 3:18pm on 23 Apr 2010, rbs_temp wrote:

    "You've been predicting lots of things for ages - mass civil unrest, FTSE at 3500, worthless currency, double-dip recession, the collapse of capitalism..."

    I never gave you time frames - so far I have predicted many things - but unlike Journalists and bloggers I reveal my sources. There are no secrets of information with writingsonthewall.

    Gerald Celente - and are you going to argue with the man who predicted the following?:

    The "Great Recession" (to begin in 2007)
    Jan. 2004, Trends Journal

    The "Panic of '08" (financial meltdown)
    Dec. 2007, Trends Journal

    The Coming "Greatest Depression"
    Dec. 2008, Trends Journal

    The 2nd American Revolution
    Dec. 2007, Trends Journal

    Gold Bull Run to Begin
    Dec. 2001, Trends Journal

    Real Estate Peak - Decline to Follow
    Dec. 2004, Trends Journal

    Dot-com Bust (to hit by second quarter of 2000)
    Oct. 1999, Trends Journal

    Asian Financial Crisis
    1997, Trends 2000 by Gerald Celente

    Pre 9/11 warning
    Dec. 14, 2000, USA Today

    Tax Protests
    Dec. 2007, Trends Journal

    "Economic 9/11" (prediction of Sept. 2008 financial calamity)
    Dec. 2007, Trends Journal

    Credit Crisis to Hit Financial Markets (by end of 2007)
    Dec. 2006, Trends Journal

    Demise of U.S. Automakers
    Oct. 2005, Trends Journal

    Gourmet Coffee
    1988, Trend Tracking by Gerald Celente

    "Clean Foods"/Organic trend
    1988, Trend Tracking by Gerald Celente

    "Technotribalism" (rise in social networking)
    Oct. 1993, Trends Journal

    The New Crusades
    Oct. 1993, Trends Journal

    "Too-Big-to-Fail" trend
    Dec. 1998, Trends Journal

    Internet Advertising to Fall Short
    Oct. 1996, Trends Journal

    The Ghost Malling of America
    1997, Trends 2000 by Gerald Celente

    "Wired and Out of Touch" (techno-addiction)
    Oct. 1999, Trends Journal

    U.S. to Lose Iraq War (one month before the war began)
    Feb. 2003, Trend Alert

    2001 Recession/"Recession Proofing" (how to prepare)
    Dec. 2000, Trends Journal

    Latino Market to Boom
    1988, Trend Tracking by Gerald Celente

    The Anti-Americanism trend
    Dec. 2000, Trends Journal

    Decline in Major Chain Stores
    June 2007, Trends Journal

    Seccessionist Movements
    Dec. 2006, Trends Journal

    ....and there are more - or you can stick with the predictions of the same people who failed to see any of this coming

    ...it's entirely up to you.

  • Comment number 26.

    Just a little off subject, PIIGS is such a course sounding name, why not use iPIGS, much nicer. I suppose there could be the odd objection from the people who "borrowed" their name from a rather well known group of the 60's. Clue - a fruit beginning with the first letter of the alphabet.

  • Comment number 27.

    Post 2 WOTW I often disagree with some of the things that you post however I must applaud you on this post as an extremely full and yet concise summarisation of the position the Greeks face.

    I am sure you are right regarding the other country spreads since this news came out though I would disagree with just one point you make re the "relatively safe" Spanish.

    I believe that Ireland will soon be seeing the benefit of its actions as the markets see the fruits of their austerity package and the strong political will to sort this out allied to an acceptance from the populace that things need to be done.

    The Irish Financial Regulators strong and decisive action over the Quinn Group despite some opposition and allied to the strong support the government has given him makes me believe Ireland will be alright.

    The Spanish economy is in an almighty mess. Many of their Cajas are sat on huge property losses with massive defaults on mortgages. Ally this to actions undertaken by Spain's big two banks (see FT link below) and I can see financial armageddon in Spain in the next year.

    http://www.ft.com/cms/s/0/ab6582f4-4664-11df-9713-00144feab49a.html?nclick_check=1

  • Comment number 28.

    The UK's turn next, or maybe Spain, but our turn will come......

  • Comment number 29.

    What's the problem with Greece requiring help from the IMF?

    The International Monetary Fund (go to their website) was born from, and DESIGNED to protect, currencies from abuse and 'speculative run' on any currency since 1944? Well, they haven't kept up with hedge funds, have they?

    Nevertheless, the IMF is an international club, with international member countries. The IMF has a well-paid board; highly-paid staff and is funded heavily (beyond numbers that even banks can imagine) by those member countries for a reason?

    There is no shame for any country to call in help of it's subscription to the IMF Club? If there is shame - then what is the point of IMF taking $trillions in subscriptions for in 21st Century some money back - so what?

    Furthermore, the IMF does list on it's website, it's most indebted by loan as Romania, Hungary and the Ukraine, but does not explain if those loans are for infrastructure building or poor IMF loan 'follow-up' via those country's ministers or ministries?

  • Comment number 30.

    Note to Auntie Beeb,

    As much as I enjoy reading and contributing to these blogs, spending an hour in modertaion wilderness is frustrating.Have the BBC cuts started already?

    As for Plamski @ 21, I wouldn't book that cheap holiday just yet,

    As the Kaiser Chiefs sang "I predict a riot!"

    Coming soon to a town near you ...

  • Comment number 31.

    Its been no pleasure watching the slow motion implosion of Greece. Many of us have commented for many months about the inevitable.

    There seems to be a fundamental human failing when it comes to experiencing loss. Many people just cannot "cut their losses" when it comes to failing investments and the like.

    If only Greece had faced reality six months ago, left the Euro, defaulted on its debts (maybe offering something like 80 cents in the dollar) and started rebuilding, then it may have stopped the very ugly scenes we are now likely to see on the news over the next few months.

    And then there is the UK. Of course normal economic rules don't apply to us as we are British. We borrow massive sums of money supposedly to grow the economy, and then get growth that doesn't even pay the interest on the newly borrowed money. But as we are British it doesn't matter. We will not implode like the Greeks.



  • Comment number 32.

    Greece is bleeding money everywhere in its public sector. If the IMF auditors are strict enough, the Greeks will pull through. Woe to the rest, who are not lucky enough to run a completely inefficient and lawless state.

  • Comment number 33.

    If you want to make yourself heard - Clerkenwell - London - Saturday May 1st.

    A large turnout will create the 'climate of fear' these politicans need to feel so desperately.

    I shall be there.

  • Comment number 34.

    Well, funny isn't it, successive UK governments have largely ignored balance of payments deficits and considered them technical statistics. But what has really done for Greece is a massive import/export imbalance. We have been fond of excusing this with 'invsible' earnings, which in the case of Greece were....invisible.

    I suspect our invisible earnings could become tangible deficits and without manufacturing really picking up (its from such a low base) we will have problems. Greek bonds yields at 9%+ means once a country enters the spiral the IMF is the only exit. Have we passed the event horizon yet?

  • Comment number 35.

    According to this article, last summer the OECD was warning Greece that the deficit will rise to 6% and now in April 2010 is 13,7%.There is something deeply wrong with that.The greek people do not believe that they are responsible for the problems.They have totally disengage themselves of the situation and of the governing of the country.I don`t know the solution but I think that they should be involved.Even if the IMF and the EU find a solution it will only be for a short time.The problem will occur again.

  • Comment number 36.

    "5. At 1:55pm on 23 Apr 2010, Chris_PE27 wrote:

    Why does the European Central Bank not just print 300 bn Euros and buy all of the Greek debt back and call it QE? It seems to work over here; the Bank of England prints £200 bn and not a single question is asked about it during the election campaign. I think the last time you mentioned QE in your blog was November."

    Because they are stupid. More precisely, because they have wrong model about the economy. Talking about dismal science...

    This is all American's fault. They are quite happy to let eurozone countries sink, and any other country for that matter. But when push comes to shove they will be printing money like hell to save their own. Bernanke himself talks about lowering taxes and funding it by money creation in his papers. Then it will be explained that economic theories were wrong, all this pain and suffering has been unnecessary, but sorry, damage is done and life is not fair.

  • Comment number 37.

    Greece should default. Why should a few rich old guys decide for the Greek people on borrowing from the IMF. 'Democracy' is for the rich guys.

  • Comment number 38.

    @ fellow comentator @writing on something.

    As a Greek Citizen I am asking for your learned opinion. Should I commit suicide today or can I have time until Sunday, because there will be roast beef for lunch?

    You paint a bleak picture, however the weather outside my window is balmy, the view of the sea enticing, nobody is on strike and I can walk any street at night in complete safety. I can still stray to the wild side a bit but it is not so wild, rather boring, believe me.

    You calculate and you despair. Cheer up, there are so many mistakes in your numbers you have every reason to be happy. Go out , get a pint, or even better come down here, we can spare a souvlaki for you, easily.

    Greece is not down and under. Actually no country ever is. Your mindset is tunnel visioned to the situation of a company. Yes, a company can go bust because the shareholders do not increase the capital to meet liabilities. In a country millions work every day pumping money into the coffer. It is totally different.

    I had to write to you to ease your angst. It occurred to me that if you are so scared about what is going to happen to us, you might do some silly thing if you realize that your banks hold so much of our paper.

    Steady on brother! There was life after Chernobyl, I was there last week. There still was life after Lehman. Sure as hell there is going to be life after a Greek default. And do not believe all these pundits of gloom.
    Thank God this time nothing is destroyed. People, factories, ports, you name it, are still there.

    Check your figures better next time, and keep your 'sang froid'. All of us on old Europe were empires some time or other in the last couple of thousand years. We lost it to the other side of the Atlantic , we loose it again this time to the other side of Gobbi. Since we lost the empire well ahead of you and we have longer experience on being the scum of the earth, I can assure you that it is not so bad at the bottom of the heap.
    We will wiggle a bit and make room for you too.

    Cause, If I heard correctly, in GDP deficit Ireland was ahead of us this year and UK ran a very close third to our second. Welcome mate !

  • Comment number 39.

    I think that the French and German governments might live to regret that they did not do more to help Greece.

    All that was necessary, as Chris_PE27 points out at #5, was for the eurozone members to agree that the ECB should support all euro denominated sovereign debt, just as the BoE would support sterling sovereign debt. This would not have cost other eurozone member taxpayers a single cent. The euro might have dropped a little on the exchanges, but this would have been as an advantage, since the rise of the euro relative to the USD over the last decade is probably not sustainable, in the long term, and the extra euros created would not go amiss while credit is still in such short supply.

    Let us hope that the IMF is not similarly blinded by monetarist dogma, and will offer Greece an acceptable deal.

  • Comment number 40.

    For all posts complaining about current problems with Greece and it's economics? From memory, Greece and the Grecians were doing very well indeed with their own currency and as an independent nation before membership of the EU? So, now the IMF are involved? Hmm?

    But why don't we hear any comments on BBC blogs from the people of Greece, or how THEY THINK OR feel about the effect of the EU membership and having to use the Euro?

    The whole concern, before and since Greece, of other so-called 'European' nations entered the EU and were 'forced' to use the Euro AND subsequent intervention of the IMF such as Romania, Ukraine and Hungary?

    One might suppose that BBC are not fully avaiable enough for EU member citizens, families etc., to communicate on all matters pertinent to average people? Or, perhaps BBC blogs are divided by country or language within the EU?

    One can only assume that the unelected EU Commission are so deliberately obtuse they even block out Stephanie Flanders attempts to provide us with the bigger picture? This comment started with the IMF apparently 'bailing out' Greece? It's unfair to label any country and the BBC should welcome all comments from all EU countries affected?

  • Comment number 41.

    This response goes to "m".
    Dear "m", Greece may be a joke to you, but for those of us living here, we are certainly not laughing.
    I hope this situation does not occur in your country

  • Comment number 42.

    In the case of Greece forget all the economics you have learnt.
    Greece is very special... this crisis is home made, only accelerated by the global one.

    The Greek PM Papandreou calls them speculators, I call them prudent investors and nobody can force them to lend their money. Not even the PM with his loaded gun on the table (you can see from his language that he grew up in the US). Did he shoot himself his Manhood off or why does he seems now so impotent, I mean powerless...!?
    Papandreou himself (which one? Giorgos the younger, Giorgos the elder... his grandfather or Andreas... his father???) is the best example of the problems in Greece. Right and left family clans are governing this country for decades. Kennedy is nothing compared to what happens here...
    Just look at the ex-PMs and ministers and their family ties.

    Not to mention,,,
    * corruption (envelop and favour.. the two most important words in Greek)
    * black economy of at least 25% and its linked tax fraud... add this and the not-collected tax to the official figures and the debt/deficit - GDP ratios will go down dramatically
    * socialist mentality (saying: I have tied my donkey at a post) - dream jobs are in the public service, especially in the finance ministry, they pay the best... you ask yourself with what money, looking at their track record of tax collection
    * other dream jobs are being self-employed that allows you to cheat on your income tax... they have the poorest private doctors... according to the official figures... you never pay them by credit card... only cash... WHY? Hmmm!!!
    * too many, much too many, "unusefully" many civil servants leading to a unsustainable bureaucracy and to bankrupt state companies... see Olympic Airlines until recently
    * low competitiveness because the state is involved in everything...
    * very strong and well organised unions, like in the UK before the Thatcher area
    * general early retirement... very early... the dream

    You are talking about solidarity!?
    Where is the Greek solidarity in all this...?
    Greece, the poor country of not so poor Greeks...
    They will now have to use the cash hidden under the mattresses...

    A central-European living in Greece

  • Comment number 43.

    #4
    "The reluctance on the part of governments to install controls over banking that will protect the saving and investments of citizens is the most disgusting example of governmental corruption present."

    =======================================================================

    It will happen.

    It will happen as part of a civilised functioning of the democratic process.

    Or it will happen the same way that power sharing came to be in Northern Ireland.

    It depends on how bad this recession is going to be and how many innocents are forced to pay for the greed of the banking class.

  • Comment number 44.

    #5
    "Why does the European Central Bank not just print 300 bn Euros and buy all of the Greek debt back and call it QE? It seems to work over here; the Bank of England prints £200 bn and not a single question is asked about it during the election campaign. I think the last time you mentioned QE in your blog was November."

    =======================================================================

    Because they are not imbeciles.

  • Comment number 45.

    Forgive me for being thick, but haven't numerous countries 'defaulted' on their debts over the years and the world just carries on as normal? Banks around the world have written off trillions of dollars of National, Corporate and Individual debts but there isn't any sign of a 'New World Order' or revolution breaking out anywhere, isn't this all just a tad overblown?

  • Comment number 46.

    #38..class

  • Comment number 47.

    @george kamarinos
    Well said. I am in the UK now, weather miserable. I wish I was in Greece. I have already planned my vacation for the summer. I will bring some pounds and enjoy the weather and the people. Greece will rise again.

  • Comment number 48.

    I note that Ireland made a bold decision to cut excess spending and is having a degree of success.
    I note that Greece does not want to start cutting expenditure as this might affect the move out of recession.
    Have I heard this somewhere before!
    It has to be a close call whether Greece leaves the Euro and floats quickly down.

  • Comment number 49.

    I cant believe that people are so naive...
    Greece serves Germany's and US's needs the best way:
    1) cheaper euro means more exports from Germany
    2) stronger dollar will help US inflation rate after all this endless printing of dollars in order to restart the economy
    3) US through IMF through Greece can now interfere with EU's domestic affairs
    4) Euro is the worst option for countries like Spain Italy Portugal Greece Belgium Austria etc etc whose their economy doesnt depend on exports
    5) UK could deal with the crisis by having the pound devaluated by almost 30% and printing lots for money as well. Greece doesnt have this ability.
    6) Banks are making billions with the CDS game
    7) IMF will go after Italy Portugal Spain and UK without any doubt
    8) The lobbies that created this crisis that devastated the middle class world wide by stealing billions of dollars and euros through stock market and banks
    Questions for all:
    How many lives, how many countries, how much more money, do they need in order to get satisfied? How many wars are upcoming?

  • Comment number 50.

    The UK taxpayer has to put its hand in its pocket to fund its 5% share of the IMF loan which was £650m and that has now seemingly increased to £880m. Greece is a basket case and has been for years, living way beyond its means with a bloated public sector that it cannot afford, bolstered by unions that go on strike at the drop of a hat. It's clear that the markets do not agree that the austerity measures go far enough and are voting with their feet. The Greeks will be back for more before you can say hippo. So how is Mr Broon going to cover this latest cash call?

  • Comment number 51.

    If this entry sounds confused, it's because I am confused. Lots of talk among Greece, IMF and EU (in Washington yet), but I cannot find when and where Greece has actually signed for an IMF loan.
    The fact that many senior Greek officials are in Washington for the IMF meetings likely means that nothing will happen over the next few days.
    A Letter of Intent is nothing until it is signed.
    If the "risk" premium on Greek sovereign debt is much higher than it was only a few weeks ago this implies that there is very likely a gambling implication that is driving the prospect of Greek default upwards. This may even be a topic of discussion in Washington.
    What are all these finance ministers doing in Washington?
    Finance ministers and central bank governors are tackling some of the main challenges to the recovery of the global economy. The G-20 is meeting today; The IMF and WB hold their annual spring meetings on Saturday and Sunday.
    There’s little doubt debt-laden Greece is on the agenda, especially because the country's sovereign credit rating was cut by Moody's Thursday.
    As long as capital flows remain unregulated anywhere in the EU, financial problems are likely to continue. This includes financial dealings with any unregulated country, especially the United States of America where instruments like CDOs flow totally unregulated - often like tidal waves.
    The 'rescue package' proposed by the EU (but especially the involvement of the IMF) would simply protect foreign debt holders who invested in Greek bonds at inflated values, possibly using shorts.
    The EU has made 2 proposals:
    1. The creation of a common fund responsible for bailing out, with strict conditions, a EU member country in the brink of default. This has been dubbed as the European Monetary Fund by the media.
    2. The construction of single authority responsible for tax policy oversight and government spending coordination of EU member countries. This one has been dubbed the European Treasury.
    The monetary fund is to be financially supported by EU member governments; on the other hand, the treasury is to be financially supported by the European Commission.
    Strong European Commission oversight in financial fields (taxation and budgets) and the enforcement mechanisms that go with it have been described as infringements on sovereignty; therefore, option 2 has been opposed by important EU nations such as France and Italy.
    Some have contended that the preferred solution to the Greek bond 'crisis' would be an Greek exit from the EU followed by a devaluation of the Greek currency. But I can’t see why proposal 1 would not accomplish the same thing.
    On the 23rd of April 2008, the Greek government requested that the EU/IMF bailout package be activated. The IMF has said it was "prepared to move expeditiously on this request." The size of the bail out is expected to be €45B ($61B), with a pay out within weeks of €8.5 billion of Greek bonds becoming due for repayment.
    Something is in the brew, but I’m not sure what:
    March 15: EMU finance ministers agree on mechanism to help Greece but reveal no details.
    March 18: Papandreou warns Greece will not be able to cut deficit if costs remain as high as they are, threatens to go to the IMF.
    March 19: Commission President, Barroso urges EU member states to agree a standby aid package for Greece.
    March 25: ECB President Trichet says his bank will extend softer rules on collateral (accept BBB vs. standard A-)in order to avoid a situation where one ratings agancy (Moody's) basically dictates whether an EMU country's bonds are elligible for use as ECB collateral.
    April 11: EMU leaders agree bailout plan for Greece. Terms are announced on EUR 30 bn of bilateral loans (roughly 5% for a 3-year loan).
    April 13: ECB voices its support for the rescue plan.
    April 15: Oli Rehn says there is no possiblity of a Greek default and no doubt that Germany will partcipate in the bail out plan.
    April 23: Greece officially asks for the disbursement of money om the aid package effectively activating it, but is this inclusive of IMF?
    All in all, I don’t believe that Greece will revert to an IMF loan. All in all, the EU in some way will bridge the Greek deficit pending the G-20 in June. The G-20 in June is beginning to look like a gloves-off match to deal with sovereign debt created by foreign gambling (shorts).
    As the Euro weakens, more capital migrates back to the dollar. A stronger dollar is necessary for lower interest rates in the US; lower interest rates in the US are absolutely MANDATORY, or interest-rated derivatives will collpase.

  • Comment number 52.


    We will probably be next.

    Secondary market yields of government bonds with a remaining maturity close to ten years (March 2010)

    http://www.ecb.int/stats/money/long/html/index.en.html



    Spain 3.83%
    Portugal 4.31%
    Ireland 4.53%
    UK 3.98%
    Germany 3.10%
    Italy 3.94%
    Greece 6.24%

    Only Cyprus, Malta, Slovakia, Portugal, Ireland and Greece pay more than the UK.

    Significantly, the UK is worse than Italy and Spain.


  • Comment number 53.

    Here's another country 'not defaulting'

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7620444/Fitch-warns-of-debt-shock-for-Japan.html

    My favourite line is:

    The Fitch Report comes two days after the IMF warned that the global banking crisis has mutated into a sovereign debt crisis that risks setting off a second phase of economic turmoil.

    Mutated? - don't you mean 'created by the actions of Government absorbing private sector (mainly banking) debt'?


    –verb (used with object)
    1.to change; alter.
    2.Phonetics . to change by umlaut.
    –verb (used without object)
    3.to change; undergo mutation.


    So it's just changed then? by itself? strewth - I shall be wary of this mutation if I were Governments.

    The lies are getting more ridiculous by the day.

  • Comment number 54.

    Stephanie - if the IMF component is bigger does that mean the UK component of the bail out is bigger ?

    How much are we in this for ?

    Why isn't this a political issue as it is in Germany and France ?

  • Comment number 55.

    38. At 5:17pm on 23 Apr 2010, george kamarinos

    Oh I share your pain george - and I know there is life after default.

    What there isn't is Capitalism after a world default.

    That will be good for all of us.

    I must say your written English is excellent for someone from Greece - I wish my Greek was comparable.

    I see you have signed up today and I look forward to hearing more from you in the future about the situation on the ground.

  • Comment number 56.

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

  • Comment number 57.

    To Hume it may concern, carry on doing your worst, your foolish idiots the more you try to do to protect what you have the quicker you will lose it.
    When this is over new currencies will be produced by all nations rendering your profits worthless, do not believe that you are untouchable

  • Comment number 58.

    45. At 6:16pm on 23 Apr 2010, mischievousCheesy101 wrote:

    "Forgive me for being thick, but haven't numerous countries 'defaulted' on their debts over the years and the world just carries on as normal? Banks around the world have written off trillions of dollars of National, Corporate and Individual debts but there isn't any sign of a 'New World Order' or revolution breaking out anywhere, isn't this all just a tad overblown?"

    This is true - but it's been a long time (if ever) so many faced default at the same time.
    If you went bankrupt but your friends and family didn't - then you would be much better off than if they we're all bankrupt too!

    The IMF is a ponzi scheme, I'm willing to bet the US is the biggest contributor - and are they feeling flush at the moment? without new money coming in - the scheme will collapse - and then we have a serious credit problem worldwide. Like the credit crunch - but on a bigger scale.

  • Comment number 59.

    48. At 7:03pm on 23 Apr 2010, AscotFacts wrote:

    "I note that Ireland made a bold decision to cut excess spending and is having a degree of success."

    Really? - can you explain how you define 'success'?
    Haven't they just had to bailout their banks for a second time, and aren't their bond yields on the rise? ...and aren' they 3 months off a technical depression?

    "I note that Greece does not want to start cutting expenditure as this might affect the move out of recession.
    Have I heard this somewhere before!"

    Ah - I see where you're going, is this o proote Tory policy? - but are Greece any worse off than the irish?
    The Greeks have had protests - but the dissidents are n the rise, something which was obvious as people always go back to their previous sanctity when trouble hits. In the case of the irish - sectarian violence.

  • Comment number 60.

    51. At 7:41pm on 23 Apr 2010, BluesBerry wrote:

    "If this entry sounds confused, it's because I am confused. Lots of talk among Greece, IMF and EU (in Washington yet), but I cannot find when and where Greece has actually signed for an IMF loan."

    My post on #2 shows the timeline - 5 weeks to get the money - minimum I am led to believe.

  • Comment number 61.

    @ManInAShed
    It has been answered in previous posts I think. The answer is yes but it will be relatively small moneys, probably less than £1b. Do not forget that Germany and France will pay both through the eurozone mechanism and IMF. There is an order of magnitude of difference in the amounts. You have to ask yourself what is the alternative: complete and utter default (actually this is advocated by many Greeks) in this case, Germany, France, UK, US lose a lot more moneys because Greek debt is owed to them. There will be a renogiation of debt for sure. Banks will lose moneys. Imagine what will happen in this case, you might have to bail out RBS one more time! This would be entertaining...

  • Comment number 62.

    50. At 7:40pm on 23 Apr 2010, Kevin S

    Stop throwing spanners in the works - they already have have the toolkit in there already!

    I didn't realise we contributed to this loan - well that's made it all the more interesting...

    Have you got confirmation from a source? - I'd like to see that!

  • Comment number 63.

    This is very hard on the Greek people, and they need immediate help from the IMF. The UK was correct to be sceptical of the robustness of the Euro Project. Its economic governence will have to be changed to ensure these sorts of crises can be dealt with more expeditiously in future. Because there will be more of them.
    It's fortunate for Euro States that this deficit problem has occured in one of the smaller national economies in their Euroland. This Greek problem can and should be resolved without contagion. But, imagine if such a large deficit had been uncovered in one of the larger Euro economies! It's a timely wake-up call!
    Lack of accurate and timely Financial Statistics has always been the weak link in the Euro. That lack of information has meant that ECB decisions have had to be made without the more accurate modelling available to the BoE or the Federal Reserve. Even then, different forms of Banking supervision have failed spectacularly in the anglo economies.
    There needs to be a planning assumption that there will be future financial crises. Provisional plans should be set ready and ensure that policies are available for dealing with financial crises when (not if) they arise. That will probably mean that the IMF will have to be involved as a matter of course in the event of a threat of a national default. Notwithstanding Gallic reservations about involving an institution that is led by the USA.

  • Comment number 64.

    Oi - WOTW - where's my revolution, you promised me one.

    I want it, and I want it NOW!!

  • Comment number 65.

    My comments about Ireland's bond pricing was about three or four days out of date

    Accurate then, overtaken by events now

  • Comment number 66.

    as i keep posting...WATCH THE UK GILT YIELD....

    the debt-death spiral has started...
    Gordon's bequeath to our once solvent nation
    whoever "wins" this election is doomed, as is the UK.
    Its nearly wake up time....

    Thankfully, I'm now in Switzerland and keeping most of what i earn ;-)
    Good Luck!

  • Comment number 67.

    Post 64. WOTW promises it on the 1st of May in London (see post 33 above).

    It's nice to have an uprising on a Bank Holiday weekend. How very British.

    Its also the May Day Bank Holiday. How apt.

  • Comment number 68.

    Hello to everyone. Having read your comments, I would like to share some thoughts with you. I am a Greek citizen, living in Greece. I am 35 years old, I have two Masters degrees, I have been working for some 10 years now, in the private sector. I have never taken a bribe, never given one, never stolen from the state. I consider myself European, my generation usually does, I have lived abroad for five years, I chose to return as I love my country, and my people, with all its strengths and weaknesses. Now I hear that probably my salary is going to be cut by at least 10% (and it is not at all high, about 1.500 euros), that I probably won't get a "13th salary" for Christmas, that I probably won't get a "14th salary" for Easter and vacations (combined), that I won't be able to retire before I die and many more. And I am angry. Angry at us Greeks cause we never weathered through our biggest flaw, this silly idea that we are can befool everyone else, and our second biggest flaw, our constant grumpiness that hell is always the others. Angry at our politicians, cause they never rose past the people that elected them. Angry at Europe, cause they are supposed to be allies, not loan sharks. I am also afraid. Afraid for my job, my life, my future, the future of a whole generation of people like me. But I am a firm believer in the saying "whatever doesn't kill us, makes us stronger". We'll get through, and hopefully learn from our mistakes, and come out of this a bit more self-aware and powerful. So don't write us off just yet. The sun is always here, so is our sunny predisposition. And beware, Sartre himself (is said to have) also said Le paradis, c'est l'un pour l'autre.

  • Comment number 69.

    ghostofsichuan wrote:
    "And not a single banker in jail. It is not just that Captialism can spur greed to unprecedented historical levels, but that greed can corrupt governments and allow those who diminish both public and personal wealth to walk away with obsence pockets full of cash and not be held accountable for such actions.
    The reluctance on the part of governments to install controls over banking that will protect the saving and investments of citizens is the most disgusting example of governmental corruption present.
    All elections are talking about plans for "recovery" and nothing is being put foward about protecting the public and national economies from the banking cabal and its ability to create these conditions. Everyone wants to pretend this is a technical issue when it is an ethical and legal issue. Your governments do not represent you."

    Unfortunately I believe the problem is one degree worse still, GOS. After following the same reasoning to the same conclusion, I not only agree that representative governments have been hijacked by the corporate sector and no longer represent the electorate. I would go further, and state that the judiciary have proven to be corrupted and partially to blame. I would accuse the judiciary of Europe with failing to uphold the rule of law.

    They have embellished the rights of the corporate entity until it has grown into a ferocious political beast of judicial architecture. In short, the current corporate control of the representative system could never have occurred to its full extent without the active judicial legislation which has granted the corporate entity its legal powers, more so than any government contrived legislation.

    If government now dances to the tune of the bankers and those who sponsor the party system, then the judiciary tunes the instruments and beats the drum.

    The legal corruption is profoundly distressing, and has become a culture divided from the reason of ordinary honest people. Lawyers and judges have become predators, feeding on common citizens as if a separate species in the primordial jungle. I would call them parasites, except that this implies an ability to shake them lose, and also fails to convey the intelligence and conscious knowledge of what they do.

    Europe and the UK desperately need human rights and democracy, and a separation of powers in government. The current economic insanity, and the powerlessness of government to stop it, betrays a devolution into barbaric feudalism. It seems to me that when the lawyers break the law, and when government are for hire to the highest bidder, then of course the numbers will tell the story of decay and collapse.

    I find it curious that most journalists are aware and interested in the numbers, as are the majority of working people. And yet the politicians preach on and borrow further, as if these numbers mean nothing significant, and the bankers pay themselves bonuses as if they are doing the very best of jobs within a purely free market.

    Talk about fiddling whilst Rome burns. Oh well, such is the fate of the fascist system.

  • Comment number 70.

    Hmm.... Stephanie I guess BBC would not mention what Russia says about all that. Cos "bad tongues" said Dmitry and Vladimir think it is a good idea to borrow Greece with its much need cash in near-normal (...unormal for Greece) rates.

    Let alone BBC mentioning such things (a sacrilege for the British!) Shouldn't the Germans be happy with such an option? Of course the Russians do not lend that money for just being friendly but for pushing the Greeks do more business with them. But their business is all about gas, pipelines, ports and other loveky stuff....

    .... not pharaonic bridges in the middle of nowhere, nor wrestling stadiums and terraforming for boat races...

    If the Germans do not want to pay (i.e. them borrow at 3% and lend Greeks at 5% i.e. making millions out of thin air...), why don't they let Greeks borrow from Russians? Not only they will borrow cheaper but Russians will bring more business there and it will improve the local economy, so why not?

    Well ... I am going to repeat it for the 1001 time... it is not about money. It was never about money. EU and private US companies were funding Greece (correct this to:...were funding Greek corruption and spreading it to all levels of society) knowingly all these years and while the party had to end as early as back in the late 1980s (Greeks expected the end around 1991-1993...), they thought it was not enough and that Greece could go on being borrowed more and more for another 15 years... 15 years!!!! Impressive! I wonder whee all that money came from. How come had they not seen that Greece has not the basis to support all these loans?

    Said it. Not about money. Money is printed paper, and the one who prints it and lends it does not want it back. What he wants is geostrategic control of trade-routes, land and ressources. Germans already 1 month ago were talking about selling islands and other such nasty jokes but it is down to that I am afraid. All the rest of the talk is needless.

    PS: By the way there is huge involvement of foreign estate and other related companies in Greece right now... do you think it is acidental?

  • Comment number 71.

    49. At 7:38pm on 23 Apr 2010, christos diamantopoulos wrote:
    How many lives, how many countries, how much more money, do they need in order to get satisfied? How many wars are upcoming?
    ----------------

    No worries, christos - the system will reboot itself in 2012.

  • Comment number 72.

    WOTW,

    "The Fitch Report comes two days after the IMF warned that the global banking crisis has mutated into a sovereign debt crisis that risks setting off a second phase of economic turmoil."

    This is really a self-fullfilling prophecy. At last 18 months ago many of us were warning that the credit crunch/banking crisis was merely the first stage of a process that was ensuring that we (the world) were destined for the greatest depression we had seen. At that stage most of us could not clearly identify just how the decline into depression would actually work out. However the route is now becoming more clear.

  • Comment number 73.

    Hello to all.

    Re: Post 68.

    Thank you, Katerina, for 'putting a human face' on this discussion.

    Further, I can tell the reader that the Yanks[some of us, anyway] do

    care what happens in the EU, in Greece, to the euro, to all of Europe.

  • Comment number 74.

    #73 SteveSpencer,

    And hello to you too.

    You are totally right to applaud putting "a human face" on the discussions here. Too often it gets forgotten that essentially all countries are really all about people.

    Perhaps we loose sight of that fact when we consider the USA in particular and that maybe because we have mostly grown-up with the dilema of an essentially socialist Europe co-existing with what appears to us to be the rampant capitalism of the American Dream.

  • Comment number 75.

    @oeichler
    " The Greek PM Papandreou calls them speculators, I call them prudent investors and nobody can force them to lend their money. Not even the PM with his loaded gun on the table (you can see from his language that he grew up in the US)."

    If they are prudent investors and do not want to loose their money how come the every bond issue is oversubscribed many times over?
    Don't be naive they are just trying to make more money. Everybody knows somehow the debt will be guaranteed and returned to them so their trying to squeeze out as much as possible.

    You are right though, the PM (Papandreou) has no "guts". He should have defaulted and taken down Germany, France, UK down with Greece.

    IMF will cover sovereign debt but what about the private banks holding private Greek banks' debt?

    There is truth in many things I have read in the blog about how this is a game where some are making money out of thin air and looking for control to make different, greater kinds of longer term gains.

    The whole world at this moment is working with printed money that the big heads collectively decided to create out of thin air. Greece is too small to be in the club of decision makers but it is in a way "too big to fail" so nothing terrible is going to happen.

    The stupidity of it all is that the vast majority of Greek people will suffer but their suffering will not be redeemed at the maximum possible gain. IMF would have imposed more or less the same but the benefits would have been a lot bigger.

  • Comment number 76.

    This was a problem waiting to happen. How could a single currency work when participating countries have separate governments, each pursuing their own economic policies?

    Obviously the only way a single currency could ever work would be if Europe had a single government.

    We now know that was the real plan - to be achieved piecemeal by stealth.

    The single currency was never an economic tool, but a political one.

    After France, Netherelands and Ireland had voted "no" for the new constitution which would have paved the way, our European leaders conspired to push it through without European Citizens having any more votes. (Brown and Clegg both conspired to deny the British the promised referendum on the treaty)

    Unfortunately the EU machine couldn't keep the fragile currency going long enough bring about their plans for greater integration - and creation of the embryonic Super State.

    It's sad to see Greece in trouble, but this highlights why a single currency doesn't work.

    Worryingly, Nick Clegg still wants to join.

  • Comment number 77.

    Greece's issues will force the EU nations to go places they would have never gone.I think the situation in Greece is indicative of economic conditions around the world,despite the sugar coating given by Obama,Geithner and the others.Kosta Karamanlis should be investigated for his mismanagement of the Greek economy,all of a sudden he has US residency and his children go to private Boston schools,as PM of a bankrupt country,he should have just the clothes he wears.I think they should prosecute those who knowingly were involved in saddling the Greek nation for disgusting debts such as US$10-20 billion for the Olympic Games in 2004,the US $ 28 billion bailout of the banks in Greece,Karamanlis's properties and those of his lieutenants,who embezzled millions and went from eating fava beans everyday to having villas and mansions worth millions,and to those bankers in Europe and the USA,who knowingly exploited the weak and poor in Greece and elsewhere.They are disgusting.One day they will bow and confess.The people of Greece are not to blame,they are just trying to live.

  • Comment number 78.

    "As to Greece's eventual bankruptcy, I have the following to say: the southern Balkans mystifiers will invest all their energy blaming international bankers, the Papandreou government, Germans, Americans, British, Macedonians, Albanians and Turks for their current calamities. At no point will they look in the mirror and wonder if and where they have been doing something wrong in the last few years."

    The above is a prediction I made only yesterday on Gavin Hewitt's blog. Even I am flabbergasted by how quickly my prediction has turned into reality.

    Greeks are never going to pay back the money they borrowed from Europe, this is true. This is not because any other country wants a "geostrategic advantage" in the region. The comment about selling uninhabited islands was not made with a view to actually buying them. Nobody wants, which is why nobody (or hardly anybody) lives there. But bankruptcy requires the party that filed for bankruptcy to sell everything they have to service their debt.

    As is so common in that part of the world, it is again everybody else's fault now. And because everybody is being so horrible to poor little flawless, innocent Greece, people now want to bed with the Russians. As if that was going to change anything. The Russians are even less capable than Europe of playing patron to a 10-million nation of civil servants, pensioners and children. The Russian "economy" is based on flogging natural resources and blackmailing east European nations by threatening to withhold natural resources. It is a non-economy. And this non-economy is now supposed to guarantee for the Greeks' continued privilege to retire at 61, give civil servants' orphaned daughters a lifetime pension and produce no goods whatsoever, whilst having a gigantic 30 percent corruption rate? One non-economy propping up another non-economy - how would that work?

  • Comment number 79.

    There is a country to the East called China where most of the Wests' debt now resides.
    It is no coincidence that China has chosen this moment to neutralize North Koreas' supposed threat to the West, and I suspect they will do the same to Iran in due course.
    I also suspect India will join forces with China to enable the West an honourable retreat from financial Globalisation.
    I often remind myself of the question to Chairman Mau, " What do you think of the French Revolution ?", his answer was, "It's too early to tell."
    Perhaps we need to think beyond the five and ten year return timescale.



  • Comment number 80.

    Re. Katerina. #68.
    I take my hat off to you Katerina, you have the best of me, I live in a cold country where compassion is rare, but if it comes my way I take a little to keep we warm and pass it on to those who have none.

  • Comment number 81.

    9. At 9:05pm on 23 Apr 2010, writingsonthewall wrote:

    "Ah - I see where you're going, is this o proote Tory policy? - but are Greece any worse off than the irish?
    The Greeks have had protests - but the dissidents are n the rise, something which was obvious as people always go back to their previous sanctity when trouble hits. In the case of the irish - sectarian violence."

    Um, doesn't the sectarian violence happen in the British part of Ireland? No riots in Dublin.

  • Comment number 82.

    Despite the reassurance on TV last night that "Britain is far behind the Greeks in the ratio of total debt to GDP" it's becoming increasing clear we're doomed so we'll be greeting our Greek brothers and sisters in the bread queue's of Europe within a few years, maybe even months. The word "Behind" gave it away, we're following them not standing still watching them fade from view in the distance.

    So here's what I'm doing, unfortunately I can't afford gold and fast motorbikes like WOTW so my alterantive is: I have a large garden, I've pumped all my last cash into fortifications around it, I've turned the land inside over to agriculture for in the forthcoming days of poverty the man with the last cabbage will be King. Ten ounces of gold for a cabbage WOTW - deal or no deal?

    Personally I think it's going to be every man for himself, we Brits don't do revolution very well, and when we do we reinstate the vanquished after a few years because - "Things weren't that bad after all"

    What would happen if, say, we all, every single one of us stopped paying our loans off i.e. did what some are advocating Greece do and DEFAULT. Well the world would be a better place, the banks would die a horrible strangled death, we would all be debt free (they can't evict us all, or even administer national debt collection), the government would either thrive or burn depending on its loyality and no one - apart from the odd bankers suicide - would die. How about that, financial protest instead of civil disturbance, much more civilised and "British." Instead of riots we could do what we, the proud British nation have evolved to do best - nothing, we would be protesting en masse from the comfort of our own living rooms waiting for a knock at the door that never comes. It would even please John From Hendon for the extensive debt realignment as a result.

  • Comment number 83.

    Katerina,#68
    You have absolutely nothing to apologise for Katerina, hopefully the people on this blog can distinguish between someone who loves their country from those who have sold it out.
    Dont let this nonsense about the money markets get you down, gamblers always lose, the people who matter are people like you, the teachers.

  • Comment number 84.

    Yes, well said No.68 Katerina. I've read through all of these enlightening comments - some of them are real gems of knowledge.
    As I see it, Greece has four (or more) choices right now:

    1. Go the IMF and ask for a loan (useless in the long term)
    2. Pull out of the Eurozone (still unthinkable but maybe the best solution)
    3. Stall for time and hope the Euro will be seriously devalued (quite possible)
    4. Sell off some of its assets (very dangerous and undesireable)

    But I believe the Greeks know the economy better than any of us and that they are betting on option no.3.

  • Comment number 85.

    #2 >>...oh and the country is on strike again - it seems that the Greek people are none too keen on IMF stormtroopers imposing draconian measures on their country.

    Perhaps the Greeks are waiting for Luke Skywalker and his German Jedi Knights to save them from the Stormtroopers !! :-)

  • Comment number 86.

    #3 >>and not forgetting the Banking elite oops I meant IMF

    FYI, the IMF is *NOT* in any shape, form or manner a bank. It is an International Fund supposedly owned by its member countries and is used to lend aid/corrective loans to its "weaker" members !! It is *NOT* allowed to make any profits and any interest charged, less expenses, are plowed back into the fund to be lent out again.

    You can read all about its "mission statement" (horrible American term) in its own website !!

  • Comment number 87.

    #5 >>Why does the European Central Bank not just print 300 bn Euros and buy all of the Greek debt back and call it QE?

    because (1) it is not allowed to and (2) the Germans are violently against even the idea of such a thing happening !!

  • Comment number 88.

    #10 >>I do enjoy your blogs but would you kindly remember that we don't all have PhD's in Economics.

    I don't even have a first degree in economics but I can find most of the terms used in a dictionary !! It's interesting what a bit of English and a bit of effort can do !! :-)

  • Comment number 89.

    #45 mischievousCheesy101. If you are interested in defaults check out Argentina. This is a start

    http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29

    There were actually cases of people starving to death during this crisis (so their world did not carry on as normal).

    Note how the Argentines ultimately saved themselves - by a combination of currency devaluation and a refusal to bend the knee at the alter of the IMF.

    Right now all major currencies are devaluing, plus there is no euro zone mechanism for any type of regional devaluation. The IMF are being brought to the table to act as proxies for the Germans. So how can you stand up to the IMF without standing up to Germany? If the Greeks tell the IMF to go swing what will Germany do? What will be the consequences for monetary union?

    Greece can get stiffed - in which case there is no way out for them, and Greeks must die to preserve the integrity of monetary union. Greece can seek to act like Argentina in which case it must leave the Euro. If it takes the latter course German and French banks take a big hit on their Greek debt holdings. As French banks have invested some 70 Billion of French pension money in to Greece then suddenly life in France does not look so nice.

    Meanwhile...Spanish banks and Cajas are preparing the greatest show of financial pyrotechnics yet seen in Europe.

  • Comment number 90.

    Introductory: There is a nice Polish youth “new speak” word: “to endarken” as the opposite of enlightenment. And so one can say: “the chancellor endarkened us on the matters of our balance of payments. Which is both nice and often accurate.

    Thesis: (as derived from #4 Ghostofsichuan and #7 SoxSexSax (Geoffrey?)
    Capital gets socialized thus Risk gets socialized too and Management gets privatized. The task of an economist is then to be wrong on the right side. This makes it a bit more of a task than one can guess from an “ex post” analysis.

    Clarifications:
    Capital is not identical with money: it is physical means of production and actual and potential workforce. Money can be changed into capital when there is enough means of production, enough labour and – to put it short – a propensity to invest. Money created at one place can form capital elsewhere. Money gets destroyed (in many ways) and capital gets destroyed too, it takes longer then to destroy money, but consider: cutting off supply chains, restricting access to the markets for finished product, manipulating market value of the stock and after a while you have creatively destructed (obsolete) means of production which can no longer function as capital, not to mention highly demoralized workforce.
    Management doesn't have to be local to govern capital. There are decent techniques of “remote management” - say “solutions architecture”.

    Now if you look at it like this: Who copied which system and swept clean all the traces behind?

    PS. if anybody asks “Why in a blog on Greek default?” - I ask: who will be managing this peninsula? And I wrote it rather for myself, but found one or two bloggers asking to make the basics clear.

  • Comment number 91.

    #16 >>I was hoping that the Greek government would threaten to default, to withdraw from the EU and forge ties with Russia, China, Iran and Turkey (!) The Greek people have more options than they think! Why are 'investors' more important than real people?

    And Santa Claus comes down the chimney every year with nice prezzies for me !!

    The Russians don't want to bailout a self-inflicted bankrupt country. The Chinese are too busy forging deals and alliances in Latin America and Africa to bother with any bankrupt Europeans. The Iranians are busy building faster nuclear enrichment plants and the Turks would *LOVE* to take over Greece once more but the Greeks objected !! In fact, a significant part of the Greek debt had gone into weaponry to "defend" against the Turks !!

  • Comment number 92.

    #18 >>The world outside China is actually run by about 20 people, none of them politicians.

    I think Singapore will object to that statement. So will Russia, Vietnam, Cuba and Saudi Arabia !!

  • Comment number 93.

    #23 >>Who is going to bail us out ?

    The tooth fairy ?? Crash Gordon ??

  • Comment number 94.

    Beware of Greeks bearing off gifts - this is IMF money for an MFI economy.

  • Comment number 95.

    #27 >>...and I can see financial armageddon in Spain in the next year.

    Then again, maybe not !! To drown their sorrows and to ward off depression, the Brits may consume vast quantities of Sherry (from Jerez) or cheap Spanish wine or Sangria. A supermarket near me is already offering "job-lots" of cheap Spanish Sangria and wine !! One way to imporve their exoprts, I suppose !!

  • Comment number 96.

    @Hellenic1 #77

    Katerina is the exception to the rule.

    The Greek people are to the biggest extent responsible for the state they are in. Corruption does not stop at Karamanlis/Papandreou levels. The base is rotten and you know it. The base has been electing them for 25 years now.

    Granted many-many people do not have the "connections" or the position to take advantage in order to get done what they need to do. But most of us know of somebody who can, or who has done so or that who is doing so in front of our eyes.

    The problem is that nobody is doing anything to stop it. It is a vicious circle: I am poor and suffering, so I will cheat and take advantage of the State because the State does not care for me, and therefore the State will not be able to care for me and again and again.

    How many of us seeing injustice, illegal dealings, etc, etc just looked the other way and did nothing about it and let it go on?

    I am certainly one of them, and even though I have been preaching for it and in principal I am against it, I have not "reported" anyone doing this kind of illegal action. I don't know if Katerina has but I don't think she did either.

    Corruption is everywhere and so big that it is a hopeless cause to pursue. The Greek way of thinking that "rules are only for others and not for me" has to stop. It is unfortunate and harsh but maybe the only way to achieve it is through such pain.

    To be honest as I said previously, in the end everything will be fine, the money will be found, people will suffer but survive and through the survival the same mentality even more fortified will continue to exist.

  • Comment number 97.

    #39 >>Let us hope that the IMF is not similarly blinded by monetarist dogma, and will offer Greece an acceptable deal

    The IMF is not blinded by monetarist dogma. They just come in, slash and burn and leave the locals stunned for the next decade or two !! Seen it happen a time or three !!

  • Comment number 98.

    #40 Ukraine is *NOT* in the EU or the Eurozone, YET !!

  • Comment number 99.

    #49 >>3) US through IMF through Greece can now interfere with EU's domestic affairs

    This point is debatable since the US will find it hard to pay their 15% share of the IMF subsctiption in hard cash. If it pays less, it's share will have to drop as demanded by the BRIC countries and their shares will rise accordingly !!

  • Comment number 100.

    The IMF and the EU are stepping in to support Greece, the show for the traders is over for now, yields were pushed up as high as they could go.

    Attention will now turn to Portugal to try to drive up yields there (not because they have anything personal against the Portugese, just like it was not personal against the Greeks), they just want higher yields.

    The traders are hunting in packs (it is more effective at times) but there are one or two traders who can spot an opportunity elsewhere, I wouldn't be surprised to see someone drop a BRIC. (the market reaction to that would be interesting)

 

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