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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.
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.
Scotland should also pay reparations to Italy for crossing Hadrian's Wall and looting Britannia. If you include 16 centuries of interest, it would be way more than a measly $200B.
You seem to know a lot about Greece. Have you been there or is it all just internet lore?
I have to live there and I can tell you we are neither lazy nor entitled. Those of us that can actually find a job end up working for scraps. Wages for people with degrees and postgrad studies are often less than what you find for unskilled labour in other "developed" parts of Europe.
Employment is always precarious so people do not dare even claim overtime hours often in fear of losing their jobs.
Even the public sector, which has always been considered the domain of the "privileged" among greek salaried employees has for years been shrunk to sensible size.
And retirement? I don't expect to be able to retire before 70 the way things are going, and even then, it will be for pocket money, a fraction of what I will have paid in welfare taxes. Not to mention taxes for (a practically inexistent by now) health service.
Yes, for years things have been different. That was in the 80's and 90's mostly. You could say we "deserve" our fate but you wouldn't be so quick to say it if it were you picking up the bill for stuff that was certainly not your fault.
Personally I wish they would let us out of the euro. I have no illusions and understand it will be a long and hard period (perhaps even 10 years) of adaptation, during which living standards will drop even further, but what is going on right now is just pointless. In the long run, we just cannot go on like this
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 funny thing is that the "austerity measurements" are just measurements to make the country not use more money than they have
It's not that simple.
The problems are mostly because of trade deficits within the eurozone. Greece doesn't really make stuff, which means they buy stuff. They buy stuff with euros. Those euros don't come back to Greece which makes Greece not have any euros. Then it doens't matter anymore what their means are because they have none.
If Greece had their own currency, then them buying more from outside means they could just print ("borrow") more. That money would then devalue making local stuff cheaper and foreign stuff more expensive, in theory. But since Greece doesn't control its money, it just means their money is drained out of Greece.
Only way of fixing this imbalance would be to have transfer payments from Germany (and others that get inflows) to Greece so Greece has currency to spend locally. This eventually ends up in Germany and other producing nations anyway.
This doesn't mean lavish spending in Greece would result, just basic standard of living could be had. As is, this is not possible.
Greece is not the only nation in this problem. Entire Eurozone has this problem whether they believe it or not. To prevent inevitable splits, transfer payments really must happen.
As an example, see the inter-provincial transfer payments in Canada. Without these, a few provinces would be bankrupt and the entire Canadian economy would be worse off.
http://en.wikipedia.org/wiki/C...
>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%.
Germany stll pays Israel.
Germany "kinda" paid USSR that took most factories it came by.
Germany actually also paid Greece a while ago, although the scale of the payment was nowhere near what current government wants (and even (nominally) much less than they took from Greek bank)
In 1942, the Greek Central Bank was forced by the occupying Nazi regime to loan 476 million Reichsmarks at 0% interest to Nazi Germany. In 1960, Greece accepted 115 million Marks as compensation for Nazi crimes. Nevertheless, past Greek governments have insisted that this was only a down-payment, not complete reparations.[citation needed] In 1990, immediately prior to German reunification, West Germany and East Germany signed the Two Plus Four Agreement with the former Allied countries of the United States, Great Britain, France, and Russia. Since that time, Germany has insisted that all matters concerning World War II, including further reparations to Greece, are closed because Germany officially surrendered to the Allies and to no other parties, including Greece. On Sunday, February 8, 2015, the Greek Prime Minister, Alexis Tsipras appeared in front of the Greek parliament and officially demanded that Germany pay further reparations to Greece.[1] On April 6, 2015, Greece demanded Germany pay it the equivalent of $303 billion in reparations for the war. Germany replied that the reparations issue was resolved in 1990.[2]
German reparations for World War II/
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*
The US gave Greece $376 Million dollars to rebuild between 1949 and 1951. This was not a loan. The US just gave Greece the money. Given that the exchange rate back then was around 4 DEM per dollar, that is over 1bn DEM that Greece got.
The point that Germany surrendered to the US to the allies is a salient one. At least one of these allies paid back Greece two fold for its trouble. And Germany doesn't have that money it stole. That was either conscripted by the allies or sent offshore by Nazi's in hiding. It is why most claims to money and treasures stolen by Germany it WWII gets made to places like Switzerland and Austria.
This argument going back to Nazi German doesn't serve Greece. The rest of the world got over WWII years ago, and nobody is holding the current German state accountable for the Nazis. It is generally accepted that one of the last place one looks for the people responsible for WWII is Germany. Those Nazi folks either got killed, when into hiding, or got good jobs with the Americans or Russians.
What Greece should be arguing is that it was irresponsible for Germany to allow Greece in the Eurozone to begin with. Greece's addition had to do with Germany's greed. At the time, it just make it easier for Germany to export, while giving a very poor Greece a credit card it obviously couldn't handle. It is kind of the same story of all those mortgage banks lending to people with bad credit in the US. And all while, Germany was telling its citizens that they would never have to bail out Greece. What a crock.
Revolution is the opium of the intellectuals.
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.
Even the USA would split apart without these kinds of transfer payments. Most of the states in the south receive more in federal money than they pay in taxes. Actually for most of the USA you can separate red vs blue states based on if they are net positive or net negative on tax paid vs federal dollars coming back. There are states upset about this but it does stabilize the country.
Computer modeling for biotech drug manufacturing is HARD!
Goldman-Sachs was a major player in the destruction of the Greek economy. They set up unsustainable loan arrangements and then bet that Greece would not be able to pay them off.
They pulled the same scam on US home buyers that they pulled on an entire country. They originated loans that they knew were going to default. They made money doing that. Then they sold the loans to another sucker. They made money doing that. Then the bet that the loans would fail. They made money doing that as well. In the end, both the US home buyers and an entire country were left with unpayable debts.
Goldman-Sachs was monumentally predatory. As the article says:
If you read the full article it's full of excuses why Goldman was not really a bad actor, but you must remember the source is the Business Insider, and they would happily support selling children into sex slavery if it was legal because Profit!
It's a pure swindle. Goldman had the deck stacked and the cards marked. Even a sovereign government was not up to understanding how a huge banking institution was able to manipulate the financial system to squeeze them dry and avoid any responsibility.
Why is Snark Required?