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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.
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 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.
making an example?
how?
they're not yet made an example. if they get busted and thrown out of eurozone, THEN they're an example. the sad funny thing is that a lot of greeks want that to happen and their goverment to go all venezuela with monetary policy.
and if greeks weren't in the monetary union, they would have done that already three times in past 15 years.
the funny thing is that the "austerity measurements" are just measurements to make the country not use more money than they have. like, it doesn't matter if someone loans them more money if they don't fix that, 1 year down the road they'll be out of money and in even more debt. but the greeks do not want to live withing budget - they promised to live within budget when they joined the monetary union, they promised it 10 times in 10 years already but never lived up to it.
world was created 5 seconds before this post as it is.
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.
>the "austerity measurements" are just measurements to make the country not use more money than they have
Sadly naive economics like this have brought us in this situation. Greece already has a primary surplus so they can cover their own needs.
The problem is that the external debt is simply not viable. Up to 2030 greek debt obligations are up to 140billion euros. So while Greece managed with great sucrifices to have an unhealthy surplus based on neoliberal policies that finely IMF imposes for decades now, they still need 140/15 = 9 billions in average extra surplus for the next 15 years. That's simply imposible to happen, not in this world. In other words the greek debt is not sustainable and it's not a matter of if they make a haircut (voluntary or otherwise) but when.
Btw, all this mess started back to 2009 with greek external debt of 140% to GDP and after all those years of neoliberal policies it is closing to 180%.
The funny thing is that Greece already has its budget balanced better than most other countries.
Any idiot can generate an operating surplus by borrowing money to buy income-producing assets. But if the surplus is not enough to at least cover the interest, it is a failure.
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*
That doesn't really help. If they print more than they produce, the currency will drop in value.
That's the whole point. Devaluing the currency means everyone in the country takes a pay cut, at least with respect to imports. but internal prices don't change (at least not immediately). This has the effect of discouraging imports and encouraging exports. Taken to extremes it will mean hyperinflation and financial collapse but used judiciously it's a good economic tool.