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Greece Is Running Out of Money, Cannot Make June IMF Repayment
jones_supa writes: Greece, the country which has been in extreme financial trouble and high debt for years, cannot make debt repayments to the International Monetary Fund (IMF) next month, unless it achieves a deal with creditors. 'The four installments for the IMF in June are €1.6 billion ($1.8 billion). This money will not be given and is not there to be given,' Interior Minister Nikos Voutsis told Greek Mega TV's weekend show. Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. With its future as a member of the 19-nation eurozone potentially at stake, a second government minister accused its international lenders of subjecting it to slow and calculated torture.
What does the rest of the Eurozone gain by keeping this kleptocracy afloat?
It's that eventually, Germany is going to get tired of you riding on their back. If you borrow money, eventually the people you borrow it from want to be repaid. You can negotiate for more time, but only so many times before they get tired of it.
It might be better to let Greece default. It'll be painful, yes, but better deal with that pain sooner than later. The longer this goes on, the bigger the problem is going to get.
I am nervous as this feels like early 2008 all over again.
People though ack a few banks will be late paying each other for it's silly home instruments. Big deal let's buy banking shares now while they are cheap etc ...
We all know what happened next? Last year we finally came close to full recovery. The house of cards collapsed and is still being pumped up by the federal Reserve as we never had a full collapse!
Japan, America, and the EU may be next should Greece not to pay with skyrocketing rates and a great depression awaiting as the Federal Reserve won't be able to pump borrowed money to the banks, again.
Am I the only one who sees this?
http://saveie6.com/
Sovereign debt denominated in a country's own fiat currency (the US situation) is VERY different from sovereign debt denominated in some other currency (the Greek situation).
I just learned that the fines for illegal activity paid by banks since the economic collapse have totaled more than a quarter trillion dollars which is more than the entire economy of Greece. And that number is from 2014, before the $13 billion from Citi and the recent $5 billion for the banks involved in the price-fixing scandal.
Coincidence?
One of the traders for those banks, who was part of a collusion group that called itself (I'm not making this up), "The Cabal", said, in an email to the group, "If you're not cheating, you're not trying." That's $5 billion in fines for activity that made them hundreds of billions of dollars and bonuses.
And so far, not one of the members of "The Cabal" have been charged with a crime, and they'll be keeping their record bonuses. In fact, no one from those banks will be facing criminal charges of any kind.
So if you want me to be mad at Greece for letting the IMF dangle, I'm sorry. There are much bigger fish to fry.
There's so much more to this Greece story than just, "Oh those lazy Greeks with their big pensions." The IMF and the biggest banks were basically doing what those sketchy "payday loan" places in the strip mall do. They were basically doing what the home-lending institutions were doing in the 2000s. They were giving big bonuses to loan brokers for making loans - any loans - to people because they knew they could flip them on the secondary and CDO market. Investors were chasing yield so the word went out to mortgage lenders to "just get it done" and they basically defrauded as many people as possible. That's what the IMF does in countries like Greece and many South American companies. I think we're going to start seeing more of these countries deciding to just tell the IMF to go eff itself and take their monetary policy medicine and just be done with it. Then you'll start seeing the CIA-backed and German-backed and UK-backed coups start to happen.
You are welcome on my lawn.
Maybe Greeks are different but in Germany, if you borrow money, you are fully expected to pay it back. As soon as possible. Greece can make as much racket as it likes, but the Germans still want their money back. And frankly, I agree. If Greece is not willing to pay back what they take, that's theft, and they can go without aid for all I care. Especially when the borrowed money doesn't actually go to fixing its major economic issues.
"Set a man a fire, he'll be warm for the rest of the night. Set a man afire, he'll be warm for the rest of his life."
The Greek government lied to its population, and the EU, about how much debt the country had. When the other party got into office they revealed the prior party's cover-up. So far so good.
The EU demands that Greece make deep budget cuts in return for aid. These cuts were made. Unfortunately, debt to GDP ratio is debt/GDP. Debt went down but GDP went down more. Austerity is like any other kind of easy answer, it sounds good but doesn't work.
Austerity is the reapers of nations. A country that tries to cut its way out of a debt crisis can end up in vicious cycle where each cuts drops revenue by more than it saves. Historically, either something happens to break the cycle of Austerity or things get to a point when the situation becomes unsustainable. Unsustainable situations often end in a situation where the people of a country must pull down the government out of a need for sheer self preservation. You want to pull a country apart, convince it's government to engage in Austerity until their is an uprising.
The Greeks, not wanting to have to pull their leaders out into the square and shoot them, elected an anti-Austerity party. Syriza has been pretty clear. They'll compromise if a demand could arguably help the nation. Selling off a port to Dubai Ports World? Well the government isn't going to like it, but if the purchaser will contract to improve the port, perhaps its a good idea. Ditto tax reform. If tax reform means going after rich tax dodgers, then the government thinks its a good idea.
Unfortunately, this isn't enough for many European nations. The EU is insisting that the Greek people collectively feel the pain as a result of their governments actions. It does not matter that making the people feel pain won't actually help. Remember, the issue here is debt/GPD. Making the people feel pain translates into things that cause GDP to drop. The EU has to pretend that pain is an economic reform. Article 33 of the Fourth Geneva convention states that. "No persons may be punished for an offense he or she has not personally committed. Collective penalties and likewise all measures of intimidation or of terrorism are prohibited." If the EU came out and said that it intends to hurt the Greek people to punish them for the crimes of the Greek government, then the EU would be committing a crime against humanity. As a result, retaliation has to be clothed in the idea of some kind of reform plan.
Making things worse, the Greeks are in a week enough position that they don't feel that they can leak the state of negotiations to the press. This means that all the press coverage so far has been one sided. On the non-Greek side, this is bringing about a self-reinforcing cycle of bad thinking. For example, a number of German politicians have called on the ECB to cut off support to otherwise solvent Greek banks to force the Greek government to capitulate. Let's break this down. Banks are private institutions. The Greek government is a public body. Attacking private institutions to force the Greek government to do something would be, in essence, weaponizing the banking system. Once banks become a weapon that can be wielded against a country's national interest they become a national security issue. Does anyone really think that turning banking into a national security threat is a good, long term, idea for the Eurozone? Self reinforcing cycles of bad thinking like this are how elites bumble their way to the Guillotine.
So now the game is up. A normally functioning country can roll its debt over. A rich country can, over time, pay down its debt (though this might not be a good idea as it can create a bubble in government debt by shrinking the supply of bonds). Almost no nation can pay off all of their debts right now. The Greeks are basically being told to either capitulate or find some way, without further borrowing, to pay off all of their debts in short order. To put this in prospective, what if somebody told you that you had to pay off all of your student loans
um, no. Most of Greece's population don't pay tax not because they don't want to, but because they're out of fucking work. There is nothing to be had! The EU has broken the country, same as it has Spain and Italy, Eire, and almost happened to Iceland but they saw it coming and threw the thieving bastard bankers in jail!
Political debates have me rolling my eyes so much I think I got optical whiplash. I should sue. - Foamy The Squirrel
Anything that's likely to take down the entire EU if not handled just right will seriously impact the livelyhood of a large number of us.
Maybe it's just to piss of people who keep asking why various articles are on Slashdot.
If you aren't interested in the subject, don't bother clicking on the link.
Let's have private companies in charge of everything! That will work great - they will not try to make more profit than they have to and if they still do, we can vote them out in the next election.
So, I am sure that I won't have to pay $100000 in case of a fire, $20000 to have the police find the guy who beat me up (and another $20000 to have the court send him to jail) and $1M to repair a road.
Companies shouldshould try to pay as little as possible. That's the system: it depends on human greed at every exchange. Any system that doesn't is purest foolishness.
BTW, if you expect the police to "find the guy you beat you up" today, lets me say from experience the police give 0 fucks about you as a victim. The problem many large cities face today is the propensity of the police themselves to beat people up for fun and profit. I doubt private policing could actually work, but lets not pretend the current system is some fucking utopia, OK?
Socialism: a lie told by totalitarians and believed by fools.
This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money. They've been model world citizens and have been subsidizing Greece for decades, and trying to use this now is the ultimate in spoiled screaming teenager tactics. Nobody bankrupted Greece except Greece - as the Nordics, who actually got their shit together, very painfully, like to point out.
Germany are somewhat dour and grumpy parents, and a Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all. I wouldn't push it too hard.
I'm not German or Greek, but have been following this for years in the Economist and Bloomberg, and I know lazy scammers trying to wheedle more money rather than earn it.
Maybe they should shake down Italy and Turkey too.
Funny how Poland isn't flat broke; anyone that thinks Greece came out of WW2 worse off than Poland is delusional or a member of the Greek Parliament. Oh, wait, I'm being redundant. :)
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
Who gave it all that money anyway?
Giving money away is easy when it's not yours.
They *are* productive. Do you understand that the Euro is zero sum? If Germany runs a surplus, someone else in the Euro has to run a deficit. It's literally impossible for Greece to run an annual surplus unless they become more productive than Germany, which would then put Germany in a deficit.
It's a tiny economy, 2.5% of Eurozone GDP, its less than when France sneezed recently.
So PR aside, it has no real value keeping it a-float.
On the plus side, Spain just elected a bunch of anti-austerity MPs, and if you bail out the bail out of the bail out of Greece (this is the third bail out, they didn't make the requested improvements from the previous two bailouts), then Spain can rightfully demand free money too without restructuring.
The Euro zone treaties made this situate inevitable. They prevent Greece from running a deficit or devaluing their currency in order to subsidize their economy during a down-turn.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
If Germany paid war reparations for the brutal occupation and raping of the country of Greece, it would amount to something like $150-200 Billion owed.
Do you actually believe that, or are you a paid member of the Greek government?
Actually, I'm not such which would be worse...
Germany did pay, nearly 50 years ago, and settled its legal obligations at the time, money which Greece accepted.
The issue is closed, it doesn't get reopened every few decades for convenience. Frankly, most of the people alive in 1945 are no longer here, it has passed into history, let it go...
Yeah, force the Germans to pay reparations. What could possibly go wrong?
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Nobody bankrupted Greece except Greece -
As I keep pointing out, weak economies have nothing to gain and everything to lose if they cannot control the production of their currency. The weakest EU member (currently Greece) will always be at a trade disadvantage if forced to use money not under their control. Weak economies use a mixture of both currency and interest rates to reign in a spiral. Greece can't do this if they're using the euro.
Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all.
Hah! The EU would be much more harmed by a country leaving than the country that leaves. The country that leaves instantly get's the ability to control their economy. All the EU gets, OTOH, is the danger set by a precedent. Only the rich countries benefit from a common currency. Should all the poor countries leave those rich countries would be in more than a little trouble.
I'm a minority race. Save your vitriol for white people.
And that was new loans AT INSANE RATES.
Last time I've checked check dept per citizen numbers, Greek was roughly on the level of Germany.
But interest rates they are paying (and that mostly to German banks), oh my goodness:
Interest rates reflect the lenders perceived risk of not being able to retrieve the loan on time or at all.German citizens are vastly more productive than Greek citizens.
If I were to lend 10.000 euros to someone, I'd have a better chance of having that loan paid in full from a German citizen living and working in Germany than from a Greek citizen living and working in Greece. That does not mean that I would not lend to Greece, but it means that I would take a higher interest rate to compensate for the risk.
It is not a diabolic German plan to put Greece down. It's just economics.
Reading slashdot one-liner: (irm http://rss.slashdot.org/Slashdot/slashdot).rdf.item | fl title,desc*
I've been following the Greek debt crisis for at least five years, Greece's problem is that they absolutely refuse to stop spending money they don't have. Remember: Greece has never practiced real austerity (cutting deficits to match receipts) since they joined the Eurozone. Not once. (By contrast, Estonia did eliminate their deficit, and as a result started recovering from The Great Recession quicker than other EU economies.) Greece merely slowed the rate at which they were going more broke (or at least pretended to). Despite being right at the edge of complete national bankruptcy, Greece continues to insist that there will be “no wage or pension cuts” for government workers.
Greece lied about their economic situation to get into the Eurozone, lied about it before the crisis broke, lied after it broke, and continue to lie now.
Keep in mind that the past four years of bank loans from the ECB have not been to save Greece. What they were really designed to do was to keep the card game running long enough to let EU insiders and favored national banks unload Greek bonds, and to reduce their exposure to Greek default risks long enough to put European taxpayers onto the hook in the inevitable event of a Greek default. They pretended to save Greece, and Greece pretended to reform. And now here we are.
The adoption of the Euro hastened and deepened Greece's crisis, but was not the central cause, which was their refusal to stop spending money they didn't have to prop up their extravagant (even by European standards) welfare state. This modern welfare state has now become more sacred to voters than the capitalist economics that make it possible. As Mark Steyn put it, "People’s sense of entitlement endures long after the entitlement has ceased to make sense."
The problem is that with declining demographics, the cradle-to-grave European welfare state is unsustainable. Greece and the rest of the PIIGS are discovering that first, but birth rates are declining all across Europe, and modern welfare states are unsustainable without a new generation to stick with the bill. Most economists believe that Greece will never be able to pay back what they've already borrowed.
Syriza was elected on a platform of ignoring basic economic reality, but they've finally run out of people willing to loan them money to spend. The risk of a Grexit is already priced into all the European markets, But leaving the Eurozone doesn't provide relief for any of the Euro-denominated debt Greece already owes, and there's no guarantee European markets would even be willing to exchange refloated drachmas for real(er) money. And since it's hard to see any sane institution buying Greek debt after a default, Greece's government would undoubtedly start printing drachmas like mad and trigger hyperinflation.
If Greece was willing to pare back its welfare state to much saner levels, they might have a chance to slowly dig their way out of the crisis. Since they refuse to, they're in for a whole lot more economic pain...
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money. They've been model world citizens and have been subsidizing Greece for decades, and trying to use this now is the ultimate in spoiled screaming teenager tactics. Nobody bankrupted Greece except Greece - as the Nordics, who actually got their shit together, very painfully, like to point out.
If I remember correctly, it was the 3rd party auditors that made the economical recommendations that led Greece to bankruptcy. In a perfect world, the financial institutions and auditors that pushed Greece onto such a road would pay for the economical disaster that they directly contributed to. But I guess that they're busy giving bonuses to C*Os. If your financial consultant (or tax consultant) makes wrong calculations/projections/recommendations for you and puts you into default, wouldn't you seek compensation from him? You did pay him to give you realistic results. How can one country's rating go down from AAA to Junk in one day?
Germany are somewhat dour and grumpy parents, and a Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all. I wouldn't push it too hard.
You're claiming that it's not fair, but the IMF and ECB gave Greece loans at rates that are not sustainable. I can get an EURO credit at a lower rate than Greece has. Furthermore, for Germany it's win/win. They bought out a lot of Greek companies for pennies. Think of OTE that was bought by Deutsche Telekom. I personally feel like this is looting and not helping out. Private corporations from the US, UK and Germany (financial and audit) bankrupted Greece with bad advice, while earning serious money for it (think Deloitte, S&P, etc.). When the bubble burst, the Greek government received help at ridiculously high rates from a few countries and multi-national institutions. Then came the major companies from those countries and bought everything for pennies. Afterwards, they are still complaining that the Greek can't make the payments.
I'm not German or Greek, but have been following this for years in the Economist and Bloomberg, and I know lazy scammers trying to wheedle more money rather than earn it.
I see your problem right there: you're reading it from Economist or Bloomberg. How about checking out the bare survival conditions of a lot of Greek citizens? Should Greece abandon them because Germany said austerity is the way? The Greek government's responsibility is to it's citizens. P.S.: I'm not Greek or German either. I don't live in Greece or Germany, but I try to get my news from newspapers that aren't necessarily in New York, London, Frankfurt, Tokyo or Hong Kong.
UNIX was not designed to stop you from doing stupid things, because that would also stop you from doing clever ones.
I agree with everything you said but will add this....
I have yet to see any country taking IMF funds come out any better in the end. The demands of the IMF are too extreme for any country it goes into to "rescue". Not to long ago the IMF went into South American countries and now they are in serious financial trouble I argue because of the IMF.
In my opinion, it would be better for Greece to declare insolvency, pull out of the Eurozone and begin again. It will be less torture than dealing with the IMF.
This is a sig. This is only a sig. Had this been an actual sig you would have been informed where to tune for more sigs.
The US always pays its debts when they are due. I think perhaps the problem is you don't understand how US debt works, and why it is a bit special:
So the most important thing to understand is the US doesn't go and beg people to give it money, rather it auctions debt. People come and purchase the debt. You can do it yourself on their Treasury Direct site. The US sells debt instruments to interested buyers. They are bid on, and whoever bids the lowest interest rate wins. The upshot is the US sets the terms of the debt instruments sold. They have a variety, some are as short as 4 weeks, some as long as 30 years. When you buy something, the terms of repayment are stated up front: What it'll pay, and when. There is no provision to cash out early, and you don't get to dictate any terms, you just choose what note you want to buy (if they are available).
This is how public debt works in a lot of countries, but it isn't how things go when you are getting loans from the IMF.
The other important thing is that all US debt is denominated in US dollars. A US debt instrument specifies how many dollars it'll pay out and that number is NOT inflation adjusted, except in a few very special cases. Well the US government also controls the US mint, which makes US dollars. So the US government can literally print money, and inflate its way in to payments. There are negatives to that, of course, but it is perfectly doable. The US controls its fiscal and monetary policy regarding its debt. Since all its debts are in US dollars, and since US dollars are the world's reserve currency, the US cannot face a crisis where it can't pay, unless such a crisis is internally generated (via the debt limit).
Not the case with Greek debt, it is in Euros and Greece doesn't control the Euro.
Finally, there's the fact that the US has great credit. Doesn't matter if you disagree that it should, fact is it does. Investors are willing to loan the US money for extremely low interest rates because they see it as a very safe investment. 4 week T-Bills have been going for between 0%-0.015%. 30-year bonds have been going for 2.5%-3.75%. Investors bid the interest rates very low because they desire it as a safe investment.