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Will Greek Finance Minister Varoufakis Support Cryptocurrency In Greece?
giulioprisco writes New Greek Finance Minister Yanis Varoufakis, former Economist-in-Residence at game developer Valve Corporation, sees something like Bitcoin — or, more likely, a state-controlled "Fedcoin" — possibly playing a role in the (necessarily creative) rescue of the Greek economy. "The technology of Bitcoin, if suitably adapted, can be employed profitably in the Eurozone," he said.
Will Greek Finance Minister Varoufakis Support Cryptocurrency In Greece?
No
As obvious as the question is stupid.....
Most of Europe does, actually, seeing as he is negotiating with the rest of the Eurozone to make a deal that will save Greece's car crash of an economy. If Greece implodes, it could take the entire Eurozone with it by causing domino defaults, because Greece owes a lot of money to other nations that are already in dire fiscal straights
an ignorant American might not care, but President Obama has already weighed in to support Varoufakis in seeking debt relief, as he does not want a major trading partner to collapse
Greece doesn't need a currency, it needs liquidity - a crypto currency won't bring that. The entire current issue is not about which currency to go for, its how Greece keeps paying its creditors - if they can't service their current debts, their ability to borrow goes through the floor, and a crypto currency isn't going to reverse that. Greece can't back its own crypto currency with anything it has a monopoly on either because it doesn't have anything that valuable.
The European economy is contrary to 5 or 6 years ago presently plenty strong enough to absorb the exit of Greece from the Euro.
But for the EU it is a matter practicality and also of honour to keep the lot together, it is the difference between a continuing struggle and complete failure for the Greek economy and people.
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... continuing a bit.
The reason the can't escape completely the loans is simply, if they dare to say that they don't pay, then who's going to loan them money after that? Right, nobody.
How they would be able to do trade with other nations after that? Right, paying everything in front in euros or dollars, nobody else would trust them otherwise.
So, where would they get those euros / dolallars? Now, that's the real tough guestion, and I don't have an answer for that. Nor I think has Mr. Varoufakis either, and that's the reason even as he trying to play tough guy will have to thing seriously before spewing "We don't pay our loans" or anything that could even remotely be understood like that.
I just hope they hold up and tell the banks and Germany to go to hell. That is what they were elected for. Now, if they do, there could very easily be another military coup ordered by those banks. Unfortunately, it looks like compromise for the benefit of financial institutions is still the only thing on the menu. This 'crypto-currency' thing looks like a diversion.
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My favorite story about Greece's problems:
In the 90's a governmental committee was formed for the sole purpose to close a particular dam. After a decade, the dam was closed and demolished. That committee still exists. They don't go around closing other dams, they, I assume, just make sure the dam is still closed.
Source: Planet Money
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If Greece implodes, it could take the entire Eurozone with it by causing domino defaults, because Greece owes a lot of money to other nations that are already in dire fiscal straights
Two years ago maybe, when the whole euro-zone was in a depression and there weren't plans in place but now they've prepared and the Greek economy is only about 2% of the total. Germany has been very ready to play hardball and let Greece fall on their sword if they don't stick to the rescue plan. You have to remember that once you've made sure the other dominos won't fall many want to make Greece an example of what happens when you spend irresponsibly. So does their new PM really want to go "all in" and find out if they'll really get kicked out of the-euro zone? That's some real high stakes poker there if he gets called they tell him to get out.
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I'm pretty sure the River Styx freezing with Aphrodite and Helen of Troy ice skating naked while Dionysus hands out brews and bags of trainwreck is less mythological than the possibility that Greece's economy will start looking up with the current megasocialist nanny state political mindset going on over there. "Crypto" currency is right, like...literally.
Iceland did the right thinag. The Government shouldn't be forced to pay the debts of failed private companies. Even if they are banks. The PIIGS are all suffering because they followed the EU command to assume private banking debts. Notice how even in Greece, which had the most government debt, supposedly they had to cave in early because other 'the ATMs wouldn't have money to dispense next week' because of a banking run. Bah.
The Euro had all sorts of problems. That spurious inflation on the beginning was one. As for the increase in trade it went mainly in one direction and actually exacerbated the current problem.
Do you know what caused the inflation? Germany printed a bunch of DMs before the Euro came into the market. In order to keep their inflation low, and fullfill the ERM convergence criteria, they kept the DMs stashed in the banks and kept them out of the market. Once the Euro came online they converted all these bogus DMs into Euros and flooded the market with them causing the inflation, and loaned them to countries like Greece. So effectively the Germans loaned bad money to countries like Greece and are asking for good money in goods and services as return now.
Also whoever had the idea of making a monetary union with free bank transfers with a eurozone wide deposit insurance scheme was bonkers.
... do you have a source?
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Yes, just like we wiped out North Korea, Vietnam, Iraq, and Afghanistan, and just how we've just about wiped out ISIS and stuff.
It little behooves the best of us to comment on the rest of us.
Once the possibility of someone exiting the Euro becomes real other countries will be tempted or pushed out basically making it pointless.
It was an economic marriage. And like in any marriage there are good times and bad times. Unfortunately some in Europe don't think of it this way.
Not pointless - there's real economic benefit to a single currency for Europe.
If it's a marriage, then Greece is the abusive, cheating spouse. They've gone from irresponsibly spending more than they could ever repay (since they can't inflate their way out of debt), through a brief attempt at surviving austerity (terms of the debt relief they got - everyone knew it would suck), to saying "screw you, we're too big to fail, we're gonna spend spend spend, what are you gonna do about it?"
Greece was in a better economic position than most of Eastern Europe at the start of all this, with a better standard of living (even had they chosen to live within their means) than many later entrants in to Euro. But they chose to spend vastly more than they were making, running up the highest debt-to-GDP ratio in Europe, inflating that standard of living artificially until they could borrow no more.
What the US thinks of that isn't very relevant, but those Easter European countries that made real sacrifice to join the Euro, and who have been keeping their debt down and surviving with a much lower standard of living than Greece and directly paying for Greece's first bailout in some cases aren't impressed with Greece's excuses. At this point, a "Grexit" will be less disruptive than continued bailouts.
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Like I said before, They need to do like Iceland. The 'debt' is a result of bankers fraud and is not legitimate. And yes, a lot more nations should do the same. It's time to put things in the proper order and make the banks serve and not rule. That would mean instituting a public bank, through their post office or whatever.
“He’s not deformed, he’s just drunk!”
Prediction is Greece will exit the EU because of inefficient use of all forms of resources. They have been pseudo-socialist giveaway state for so long w/1 in 3 workers working for the state's institutions, they've collectively forgotten market economics is what runs countries effectively.
Venezuela is the prime example of wasteful redistribution policies by a government which collapse a society (military takeover is next.)
Greece will change fairly soon and it will be somewhat painful or they will deteriorate toward Venezuela's position, in which case it will impoverish Greece's working class.
The Eurozone might be able to absorb a Greek exit in purely financial terms, but in psychological terms it would be a disaster. If Greece leaves, then that provides a precedent for countries leaving. Investments in Euros are based on the premise that the Euro is backed by a large economic base and if countries can leave that base then there's a lot less of an incentive to use the Euro. That's likely to lead to a drop in liquidity in the rest of the Eurozone, which would make leaving an even more attractive bet for some of the weaker economies.
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Nearly every EU country has a couple of conspiracy nuts claiming *.* screwed them during or before unification.
The problem is not someone loaned bad or good money to Greece, the problem is Greece wasn't and isn't able to hold up it's own pants, all due to their own lack of courage to fix their tax and economic imbalances.
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The fact that the Troika hasn't been willing to give one iota on the Greece issue should be enough of a reflection on how little consequence they think an exit of Greece from the eurozone would be. Germany in particular doesn't want to give any ground (I imagine all of the nazi-name calling has played no small part), but they're hardly alone, many countries are taking a very hardline stance on Greece. Most parties feel that the consequence of giving way to Greece could be significant, but the consequences of their exit - while not completely painless - would not be that dramatic.
On the other hand, in Greece, there's only one route for exit, and that's capital controls (or a rapid conversion over the weekend) where everyone's assets are converted to some kind of new-drachma, which instantly devalues to half its value or less. Which is why everyone is taking their euros out of the banks, they're not stupid (unfortunately, thieves aren't stupid either, breakins have become an epidemic as they look for people hoarding money at home).
I can't see a cryptocurrency helping in any way... if anything I'd guess it'd only serve to unnerve markets even more and lose even more value as a consequence. I could picture it maybe as a simultaneous and rate-locked currency to a physical New Drachma, maybe. But it sounds IMHO like an incredibly risky move even then. I mean, one presumes for example that there's a government-controlled master key to "print" more cryptocoins? Then that means that your entire economy can be crushed overnight by someone hacking, physically stealing, misusing, cracking, or whatnot your master key. Isn't that an unnecessarily big risk to take? And on an individual level it seems full of problems as well...
Don't get me wrong, I don't think cryptocurrencies are inherently an evil or shouldn't exist. But I would have serious second thoughts about such a massive nationwide rollout on a country that's already in chaos.
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It's easy for Americans who've never had to live with a weak, low circulation currency to say "EURO BAD!". But they've never seen the consequences. How even in a good economy your money steadily becomes more and more worthless because inflation of such currencies is almost always worse than that of stronger currencies. How you pay out the nose for loans because of the higher risk of inflation or currency swings. How many companies won't even work with transfers to / from your currency.
Big, strong currencies offer serious benefits. America has been given a *massive* economic boost due to the widespread usage of the Greenback. Their economy would be nowhere near what it is today if each state had its own currency.
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There's also this big lie that "Greece has been saddled with debts that they could never pay". Greece's state assets are worth an order of magnitude more than their debts. They could sell off a tenth of them and have all of their debts in the clear right away.
Obviously, they don't want to privatize everything, and I don't blame them. But the concept that this debt is impossible to service is simply a lie. They just don't want to. Heck, they could do it without excessive pain to the middle class or extensive privatization if only they'd go after their wealthy - there's a couple dozen Greek billionaires and countless more in the next eschelons. And these are the biggest tax dodgers who don't pay anywhere close to their fair share. But Greece is apparently either unable or unwilling to go after them.
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I don't think anything that bad will happen Greece defaults, sure the government may not loans, for a while, that will just force them live within there means, while removing any interest burden. Who in their right mind lending more money to Greece anyway, and simply not trying to recover as much money back as they can. Private companies will still get loans, the wouldn't have defaulted.
If you lend people money to take on a risk (Isn't that the justification for charging interest), and if you lend too much money to people and they can't pay, well like any investment you can loose, and I don't feel sorry for the lenders. These are large banks and countries that have lent to Greece and as such should have done due diligence.
Maybe if Greece defaults, It will teach these people, don't lend to people who can't afford to pay (even countries), and it will not allow countries like Greece to get into these situations, in the first place.
At some point going bankrupt, is the only sane choice, probably better than having your entire economy crippled by interest repayments for the foreseeable future.
There are two problems with making Greece and example: they did not spend irresponsibly, they became insolvent only after Germany forced them to shrink their economy
LOL you must be from Greece, their debt-to-GDP ratio was poor to begin with increasing every year through budget deficits. They went insolvent because the market understood they had no chance of paying their debts and interest rates skyrocketed. It's rather hilarous to blame Germany and the EU for the terms of the loans when the market would sooner lend money to a drunken hobo than to Greece, it was either that or bankruptcy.
You can of course argue that they're now trapped in an evil circle where the austerity measures are killing the economy and they should default sooner rather than later, but they're just where everyone deep in credit card debt are - they spend what little income they have paying interest and don't have any surplus to improve their situation. What you're blaming Germany for is doing just enough to keep the Greek economy from dying, but not enough to cure it. That's right, you rich uncle isn't going to come in and solve all your problems. From all the gratitude they're getting I'm guessing that the next time they'd rather not bail anybody out at all.
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Whatever they convert it into, New Drachmas or Cryptodrachmas, it's still going to devalue like crazy. Both, being backed by the same entity (the state) will have the same credibility problem. Except even moreso for the cryptocurrency because of all of the concerns that carries with for many investors.
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You've read too much propaganda.
The crisis in Greece has many reasons. Inefficiency is a problem, but not a crisis cause. The fact that the country had a strongly interconnected (not to say, inbred) web of corruption between politics, administration and business is much more likely to have been a leading cause.
The greek "giveaway state" is such a cheap myth. They don't even have social welfare the way that those who cry loudest (e.g. Germany) have.
The real problem is that Greece was heavily in debt to foreign banks. Instead of giving them a way out, the governments of the countries of those banks pressured them into paying their debts and interests, and cutting spending. When your economy is in a crisis, every economist who's not a total idiot knows that cutting government spending will deepen the crisis. What a surprise, that's exactly what happened.
And now comes the magic trick: The amount of debt that the EU, European Central Bank and IWF consider "acceptable" is calculated based on a countries GDP. Greece actually cut spending a lot and last year ran on a balanced budget, something that our own Mrs. Merkel didn't manage to do with our country. Greece debt has actually decreased. However, due to the magic trick, Greece debt ratio has become worse, not because of more debt, but because of less GDP.
It's like telling you that because you're in debt, you need to sell your car to pay me. And after you've done so, telling you that because your net worth has now declined, you've now got a different credit rating and owe me more money for the higher risk.
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But Greece is apparently either unable or unwilling to go after them.
The old government was, because of the strong ties between the old parties and the business moguls. The new government has no such ties, and has, in fact, announced steps to do exactly what you say they should do.
But, of course, since they're evil communistsocialistliberalevilcommitraitors, it doesn't matter what they actually do, does it?
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Germany is playing hardball exactly because it can not afford Greece to step out of the austerity program.
If Greece does it, and survives - even if badly, it just needs to survive - then Spain, Portugal and Italy will certainly follow, with Cyprus, Ireland and others close behind.
Merkel has presented austerity as "without alternative" in the same way she has run her own country (disclaimer: I am german). Every major decision in her entire reign was never justified by being the best option or shown to be productive, the primary argument has always been that there are no other alternatives and that's it.
If the new Greece government can demonstrate that there is an alternative, the whole house of cards will come crashing down. Merkel will fall, because her entire political system (she's even made sure that there is no alternative to her within her own party, guaranteeing that they will not win the next election after she steps down) is based on this "without alternative" premises.
And if you don't think that politicians are willing and able to ruin whole countries or continents over their personal ambitions and powerplays, you've slept through all of history class.
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