to think that Greece needs humanitarian aid, not bail-outs?

[AKMD]

Hospitals are begging charities for essential drugs.
HCPs are starting to see cases of malnourished babies.
People are cutting down trees to heat their homes.
Hundreds of thousands of people cannot afford to feed themselves adequately.

Isn't this starting to look a bit more like a humanitarian crisis than an economic wobble? I can't help thinking that if Greece swallowed its pride and left the Euro rather than let everyone else prop them up then it would be an awful lot easier for ordinary people to get the help they need. Shouldn't we be sending out MSF and food stations?

"And we are certainly still in denial about when we can retire"

Are you talking about the UK here? As the UK isn't comparable in this respect to Greece. The retirement age is/will have to be adjusted upwards OR more money needs to come from somewhere, or somehow they need to increase the proportion of workers to retirees, but it's not in the same league as some countries in terms of expenditure and the government has made steps in the right-ish direction (a colleague pointed out that for every year he's been working, the retirement age has gone up at the same rate). France is a good e.g. - they won't be able to afford to carry on with the social spending they have for much longer. It is lovely that there's more of an emphasis on quality of life etc., but the country cannot afford to pay for people to retire at 60 (living on for possibly another 30 years) and being paid 70% of their previous salary.

I don't know much about economics but it was a totally mad idea for Greece to join the Euro. Apparently Greece lied about its finances to get in. I think they should go back to the Drachma.

It will be the people who did the most to cause Greece's problems who suffer least, and the people who did the least to cause the problems who suffer most.

Seems all to often to be the way of the world these days. :(

Hi ASillyPhaseIAmGoingThrough , would it be very cheeky of me to ask for a pm with the name of the children's charity you mentioned earlier? Many thanks!

In essence the Greek taxpayer is being asked to stump up for many cycles of overborrowing in one hit, they can't do it.

The banks control the economy now due to their ability to 'create' money by issuing debt (EU are now calling this 'shadow banking'). Regulators are now talking about ways to tighten this up but essentially they're not going to pull the plug on financial instruments like CDOs, CDSs or derivatives because it would cause a crash much much much greater than what we've seen so essentially we are now trapped.

Seems to me that if Greece were to default (like Iceland) and exit they could wipe out their debts and reset their currency, and avoid this effect. Does still require a shrinking civil service and viable tax system though.

What shadow banking is is very unclear:
"The UK's Financial Services Authority cites two hallmarks of shadow banking: maturity transformation, which means borrowing short-term to make longer-term investments; and the use of leverage. The other part of the definition is that the activity occurs at least partially outside traditional banking systems. That means it relies heavily on potentially volatile credit markets for funding, making shadow banks a concern for officialdom.

This definition clearly captures repurchase or repo markets, where financial firms borrow overnight and pledge long-term securities in return. And money market mutual funds are another fairly obvious component. Federal Reserve Governor Daniel Tarullo cited both in a speech on Tuesday as markets that need reform. But it's not long before arguments start. One is over whether hedge funds, or some of them, should be included. "

i will post on here, the address.

Thanks Yoda

You kid yourself then Joan. I'm sorry but we are ALL like Greece just different degrees of separation from their desperation.

The UK has an austerity budget, there is hardship and people are relying on hand-outs here. I am downright surprised you claim that this isn't happening in Ireland.

I'm also slightly that anyone thinks a good measure of a society is that the middle classes aren't affected.

But if it makes you feel better then keep the blinkers on.

I saw a headline in one of the papers today at the newstand that said something like 20% of UK adults are one bill away from disaster. Scary.

What's happening in Greece is very frightening. Feel so sorry for them. When you see someone like a Greek nurse who can't afford food and is queing for a soup kitchen its bad news.

I have wondered too if eventually we will end up living in the same circumstances as the Greeks.

Me too Silly. I worry that some serious shit is coming.

Nobody said anything about the middle classes not being affected, don't put words in my mouth, particularly not such stupid ones. That isn't at all what I said.

I have no blinkers on, I'm living here, I'm in the midst of it. Are we relying on "hand-outs" (otherwise known as the fair redistribution of our own taxes)

I can tell you we are nothing like Greece. If you think we are, you have vastly misunderstood the situation in both countries. Which is unsurprising, since your misunderstanding and misrepresentation of my post.

Me too Silly. I worry that some serious shit is coming

1930's Europe. If you can't recall the past you are doomed to repeat it.

I can tell you we are nothing like Greece

True at the moment, but these are very big forces.

I think the UK not being in the Euro and our health service etc, will understandably become a magnet as poverty bites more and more in Europe.

SecretSquirrels dh is Greek (well GreekCypriot but has worked in Greece) says the same points as you. Plus the education system too and the choice of careers/jobs.

The rich ones have taken their money abroad and the poor hard-working ones suffer. Very sad.

Apparently Cyprus is heading there too.
Spain is fucked up, Italy too.

It is all very scary.

Chazsbrilliantattitude Really? Shadow banking nothing to do with banks? Nah - banks are still integral to shadow banking - so for example where EldritchCleavage (greatname btw) states about leverage being a hallmark, banks do a lot of stuff to get credit exposure off their balance sheets in different ways for capital adequacy reporting purposes (CDS/ use of close-out netting in derviatives market - Lehmans showed us all what happens when everyone tries to close-out net on a mark to market basis on ONE group of counterparties all at the same time) - many financial instruments (derivatives, repos etc) are about leverage - about being able to have not much skin in the game for a ramped up return rate which you can then minimise your credit exposure to on your balance sheet by reporting on a net basis (so you have to put less in to the bank's capital pot) and then doing CDS on the back to pass on the residual risk. I do agree shadow banking also covers concerns over other market players who are not subject to any or minimal capital adequacy requirements though but it is not only about that.

I used to think I didn't understand how this stuff works (am sure there is a lot I still don't so not sayng I do particularly now) but since 2008 I have realised that (a) no one really knows how this all works; and (b) much of the way in which people think it will work doesn't - I think they're now calling this "systemic risk" - ie when the shit hits the fan and every financial institution, hedge fund etc has "sold" on its risk to each other and none of this is on their balance sheet so no one can know the true amount of loss or exposure even to individual counterparties and someone defaults it is absolute chaos. This is why the drive towards trying to force all derviatives to be exchange-traded so there is a Central Counterparty to enforce against.....but then if the CCP only has the same capital adequacy ratios as banks and people are still trading on margin the CCP/Exchange will still be in the same position, just this time they will know a lot sooner how much has been lost I guess.

The second paragraph on Wikipedia explains it much better than me: en.wikipedia.org/wiki/Shadow_banking_system#Credit_Derivatives_Facilitate_Extension_of_Credit

Joan:

Both countries in receipt of bail out funds
Both countries imposing austerity budgets on their populations to support their banks
Both Governments punished by the electorate

No, you're quite right, there are no similarities at all.

The whole point is that Banks are already regulated but the Shadow Banking sector isn't. For example in the Wikipedia article you link to the reference is to AIG which was an insurance company not a bank so not covered by the same regulations.

For reference an Bank is a deposit taking institution.

An apple and a tennis ball are both round and green, it doesn't mean they are the same and both edible.

So they are both suffering the effects of a recession. Well isn't most of the world? That doesn't mean we are in the same situation. The differences are far more striking than the similarities.

"I'm not saying there are no tax evaders and that the Govt there doesn't need to get itself in order. BUT this is not the fault of normal Greek people yet they are the ones suffering"

Whose fault is it, then, if we are assigning blame?

The ones who borrowed astonishing amounts of debt, some even against future lottery earnings of the state? (Greeks)
The ones who lied about the country's financial state and published fictitious numbers for years? (Greeks)
The ones who voted those liars into office? (Greeks)
The ones who have turned tax avoidance into a national sport? (Greeks)

It seems to me that the whole mess is indeed Greeks' fault.

Wheezo - re "banks control the economy now due to their ability to 'create' money by issuing debt"

Banks have been issuing debt for a very long time. Regular companies have also been issuing debt for a very long time. That is what the phrase "corporate debt" means. It's nothing new and it doesn't "create money". If anything, it withdraws money from the market.

"many financial instruments (derivatives, repos etc) are about leverage"

They are about risk management, not leverage. You don't have to borrow to invest in or to issue derivatives.

When I was in asset management, we sold options every day. Never, not at any point whatsoever, did we have any leverage.

Ireland is just one step behind Greece

www.irishexaminer.com/archives/2012/0602/ireland/suicide-rise-is-linked-to-economy-says-study-195996.html

that article does not remotely prove your point. We are not Greece, we are and always have been completely different societies. Its like saying that because I and my neighbour have both lost our jobs we are in the exact same situation, when clearly its our own individual circumstances and how we deal with the crisis will be entirely our own.