pensioners crying in Greece, uk residents should help them out

[marrqkashg]

Really breaks my heart to see pensioners in Greece crying over their pension being HALVED! There seems to be a lack of outrage about this in the uk. I really do think our foreign aid should go to these pensioners as they are much closer than other countries we donate to.

[CoteDAzur]

"to wipe the slate clean, call a debt jubilee, reset the currency, and start over."

What do you mean by resetting the Euro?

[CoteDAzur]

"Greedy banks/creditors lend more money than they probably should to perhaps not the most robust of debtors, expecting to make a profit on the interest."

Banks & creditors expect to make money on the interest they lend? How very dare they.

[Orangeisthenewbanana]

Of course they need to make money, I'm not disputing that. But they should also show a bit of common sense and lend responsibly, not keep throwing more money at people/nations who have proven that they are unable/unwilling to repay.

If you lent someone £1000 and they didn't pay it back, would you just go and lend them £2000 a few months down the line? If you would, you're a more generous person than I am!

[EllieFAntspoo]

Cote All fiat currency always returns to its intrinsic value. There isn't a single fiat currency that has not returned to the value of zero. Every singe one ends up being worthless. The Euro and the Pound are no exceptions. They are not made of magic fairy dust that prevents them being devalued.

A Pound in 1914 could buy you a months groceries. Three Pence old buy a freshly caught fish for your table. Today, due to inflation, that Pound is now worth 3p. You'd be hard pressed to buy a fish with it.

That is not becuase food is become more and more nuitritious, harder to manufacture, more difficult to grow, or more expensive to put on our shelves. It is because the value of every pound you earn is shrinking. It is heading to zero. It goes to zero because the debt on the short end of that trade grows bigger and bigger every year. The mechanism is mathematically unstoppable, because every £ that exists is borrowed into existence with interest.

Like all compound mathematical equations, it eventually goes exponential. The curve of debt to currency starts off as a nice gentle rising curve, and at the end turns up like a hockey stick. We are at that hockey stick moment.

The whole world has known about it for the past 40 years. That is why there was a great acceleration in blossoming debt market in the 80's, the pushing everyone onto credit cards and loans for what once people used to save for. And that is why every single developed country, without exception, is printing money (devaluing its currency) in tandem all at once.

The more money you print, the smaller the debt becomes. Only the less valuable your money becomes aswell.

At some point, we take the world to war. We fight for control of the resources, and when we're all done fighting, we establish a new currency(s) and begin anew.

Why do you think the very night the coup succeeded in Ukraine, we flew in special forces and removed all their Gold from the central bank? Why do you think immediately following the overthrow of Colonel Gadaffi we removed all the gold from the country? Macro-economics and geo-politics are the same beast.

[EllieFAntspoo]

orange Banks are in business, and they are in it to make money. They have been lending money for More than half a millennium and they do it very well. They have grown from a corner shop business, like a blacksmith or a tailor, to the preeminent business model on the planet. Banks have more liquidity than nations. Nations turn to banks when they need money. Factoring in loss is an irrelevance to them. What you fail to understand is that none of this money is real. It never exists. No-one ever worked for it or put it in the bank for it to be leant out. That is not how money is created. Until you understand how money is brought into being, and the implications of that, you won't understand why lending money to those who cannot pay make perfect sense.

The important thing is that the debt is created. It is not required to be paid back. Only the illusion that it is required to be paid back is necessary for profit. Greek's debt with be consolidated into a paper product by the IMF or the ECB or taken onto the books of China, and swept under the carpet.

The pain people feel in Greece is real. It is the exercising of power. A very necessary threat of force by one political entity over another. It has nothing to do with real work economics, and avert thing to do with the balance of political power in Europe.

[Orangeisthenewbanana]

Thank you for your not-at-all patronising explanation.

[skinoncustard]

Let's put our own house in order before we start to meddle . Why oh why does the UK feel the need to poke their nose into everyone else's business. We are a compassionate nation and are quick to raise money/ send help to major disaster zones, but in some cases, and Greece is one, we should butt out.

[DameDiazepamTheDramaQueen]

Grovel -I lived there and worked there as well , paying tax really was for wimps, everyone was on the fiddle, it was shocking and that was over 20 years ago and nothing has changed.

[MayPolist]

Ellie in what sense is savers' money not real?

[EllieFAntspoo]

skinoncustard Exactly. But from a central bank point of view, we don't matter, and what another country does do to undermine its power, does matter. For that reason they need to be brought into line. We the people have no choice in the matter.

DaimDiazepam The moral justification for paying taxes is rather debatable, and not for this thread. More so in Greece. Suffice to say, if you work hard, it is morally questionable that a large portion of your money be taken from you to pay for those unwilling to work as hard as you, particularly in a country where more than you average socialist sees fit to retire at 50.

MayPolist I didn't say 'savers money is not real'. What I said was, money created to fascilitate debt is not real. If you believe that you put £1000 into your bank savings account, and then they lend that to someone to buy a car, you have no grasp of how money is actually created or moves through an economy. On top of that, as we will see in Greece, when you put money into a bank, it is no longer your property. You are an unsecured creditor to a business. When banks stop working, unsecured creditors are the last people who have a right to their money back. If I were to save, I certainly wouldn't do so in the banking system. But then, I guess most people in Greece spent the last 10 years thinking, 'It's happened in Zimbabwe, it's happened in Argentina, it's happened in Venesuela, but it can't happen here. We're better managed and more honest than that.' I guess they were wrong. But don't worry, it can't happen here in the UK, right?

[EllieFAntspoo]

orange Sorry, really. I never meant to be patronising. I never meant it to be that way. It's just that finance is such a simple subject and everyone from news casters to financial advisers and bank personnel make it so complicated with language and misleading descriptions, a lot of people just get tired of all the gobbledygook gook.

[DoctorTwo]

There are too many problems with fiat money. For a start, a currency is only worth what the market feels it's worth, hence a Zimbabwean $10Trn note being worth approx £15. You can print as much as you like, but that means it devalues against other currencies. You can (if you're a bank) magic it out of thin air for people to exchange for real assets, and when people default on the loan you (as the bank) get that asset for nothing and resell it with another lot of imaginary money. Kerfuckingching. How could any banker not like that nice little earner?

The only way to get the corruption out of the banks is to democratise money, which means either returning to the gold standard or creating our own via the Blockchain. Which is well worth a Google, as it's an interesting thing and probably the future. With it we could have a global currency with no interference from central banks inhabited by thieves from Goldman Sachs, JP Morgan, HSBC and the like. Oh, we already do, it's called bitcoin.

[Orangeisthenewbanana]

No worries Ellie You're obviously very knowledgeable on the subject. I have no doubt that you're right. It just frustrates me that as you say, ordinary people are the ones who suffer because banks and governments appear to be able to make (and break) their own rules, purely it seems for their own short term gain

[EllieFAntspoo]

Orange There are no rules that cannot be broken. If you make £1B a day front running the currency markets, who cares if it costs you £20B in fines? It's the cost of doing business. I'd be more concerned that 55 senior banking officials have 'committed suicide' in the past 15 months. That sounds a lot like wet work, but maybe it's just coincidence.

DoctorTwo Apparently there has been a big move into Bitcoin by the Greek people, but they can only move money into a Greek Bitcoin exchange, so that doesn't sound like an un rigged system to me! Very fishy. I'll never do something I don't understand, and to me, if you can't hold it, you don't own it. A hundred pounds in bank notes I can hold, and so long as people will let me by food with it, it has value. £100 in a bank account, short of paying bills, is just a number on a computer screen. It can be taken from me at any point just by closing down the cash machine and the teller saying, "Sorry. from now on you are only allowed £40 a day." I guess that can't happen here. But then I guess people in Greece thought it couldn't happen there too.

[MoreBeta]

Ellie I agree with a lot of what you are saying.

Back in 2007 I told a lot of people to make sure they didn't keep too much cash in the bank and to keep plenty of physical cash in their home in case banks were closed because were in a financial bubble that wasn't going to end well. I had a fair chunk of cash in small notes and coins in a safe.

Most people thought I was mad then we had the financial crisis and the UK was 2 days away from a full banking meltdown. We had QE instead which saved the banks but only for a while. The Greek situation will spread across Europe slowly at first then quicker until it runs out of control. Govts and central banks will not contain it this time and will seize pensions and deposits as a last desperate resort.

I am once again keeping minimal cash in the bank and plenty of physical cash at home.

[TalkinPeace]

Sorry but I do not want my tax money going to pay pensions to people who have chosen to dodge their taxes.

Greece needs to stop hand wringing and sort out its economy.
It has done none of the privatisations and deregulations that were part of the original bailout.

Partly why countries like Portugal have bugger all sympathy for them.

They want north European social safety nets but are not willing to pay for it.
Time they grew up.

[Gemauve]

I am once again keeping minimal cash in the bank and plenty of physical cash at home.

I've never understand the logic of that. If the economy collapses to the point of bank closures, the physical notes have no value anyway. Why would I accept payment with what is, in essence, an IOU from an illiquid bank?

If you're a prepper, you'd be better off stockpiling canned food and shotgun cartridges.

[wanderings]

Let's put our own house in order before we start to meddle.

Are you listening, Blair?

[EllieFAntspoo]

I've never understand the logic of that. If the economy collapses to the point of bank closures, the physical notes have no value anyway. Why would I accept payment with what is, in essence, an IOU from an illiquid bank?

Venezuela, Argentina, Ukraine, Cyprus, Greece all prove that premiss wrong. When the banks don't open, cash is king. It is liquidity in a market where the check book and the plastic card cannot be trusted to be honoured. A £20 note might not buy you a case of spaghetti hoops three weeks into a 'bank holiday' but it will the weekend everyone is queuing at the cashpoints for their £40 a day. Given the choice of queuing for cash at a cashpoint or queuing to buy food, having the money available already saved you 50% of the effort needed to feed your family.

[EllieFAntspoo]

TalkinPeace Most of that is just rhetoric and dogmatic political spin. That bears little resemblance to what actually is happening or how the situation came about.

[EllieFAntspoo]

MoraBeta The problem is, in 2007 you had a bunch of big corporations over indebted to the tune of billions of dollars and we bailed them out. Now we have a bunch of countries over indebted to the tune of trillions of of dollars and no way of bailing them out. Ergo, war followed by currency reset.

Curiously, there has been a major depression and war within the first two decades of the past four centuries, encompassing most developed nations of the times. Will this century be different, or will we continue the depression/war cycle?

[CoteDAzur]

Ellie - "All fiat currency always returns to its intrinsic value. There isn't a single fiat currency that has not returned to the value of zero.... It is because the value of every pound you earn is shrinking. It is heading to zero."

I think you are overly complicating things, at least for the purposes of this thread. The value of all currencies decrease over time because of inflation. As you no doubt know well, a minimum level of inflation is essential for the functioning of capitalist economies.

It's not much fun living in a high-inflation country, though, as Greeks will certainly find out if they thumb their nose at the EU and return to the Drachma. I remember buying bread with a 1,000,000 bill. In the end, did the value of that currency drop to zero? No. Economy was sorted out eventually and six zeros were struck from the currency.

[SoupDragon]

Did the OP come back to this thread...?

[EllieFAntspoo]

The value of all currencies decrease over time because of inflation. As you no doubt know well, a minimum level of inflation is essential for the functioning of capitalist economies.

No it's not. Inflation is only exists in debt based economic models. There is absolutely no reason whatsoever why government cannot print its own currency instead of borrowing currency into existence at interest from the. Bank of England. Thee is absolutely no reason what so ever for a country not to operate with a government owned central bank instead of a privately owned central bank. Inflation is not required or created by capitalism.

Also, we do not live in a capitalist system anymore. The country has not operated a free market economy for over 50 years. Television and newspapers will not tell you how your country works. They will only tell you what the country wants you to think.



Aside - This thread has gone way off course. The Greek people will suffer for as long as it is politically expedient for them to do so. Then they will not suffer. On a very personal level, yes people in. Greece are suffering, but only those who lived their lives with their heads in the sand. The writing has been on the wall for decades, and if the same happens here, and we see the same in our cities in 10 years time, people will blindly plead ignorance and pity and make out that it was all a big surprise to them.

[CoteDAzur]

Orange - re "Of course they need to make money... But they should also show a bit of common sense and lend responsibly"

The way banks lend to individuals and companies by giving them loans is quite different than the way they "lend" to countries by investing into the sovereign bonds they issue.

Imagine that you are that person who works in at a bank's Treasury department for a salary and then gets a bonus at the end of the year if revenue expectations have been surpassed. How do you decide what to do with the liquidity available to you on that day? You bid on the auction, state the yield at which you would buy. You hope that you will buy it cheaper than it will fetch in the secondary market, and that you can resell it for a slightly higher price perhaps. Or quite possibly, you buy sovereign bonds in the secondary market, from another bank, institutional or individual investor - so you can end up owning a large portfolio of Greek debt without ever giving a Euro Centime to Greece.

All this is done far more "responsibly" than you can imagine. A trader who does these operations fecklessly doesn't survive for long.

"If you lent someone £1000 and they didn't pay it back, would you just go and lend them £2000 a few months down the line?"

As I explained above, that's not quite how investors get to hold sovereign debt. And anyway:

(1) Greece hasn't defaulted (yet) and had not defaulted while the banks currently holding Greek sovereign bonds bought those bonds.

(2) You might buy bonds from a riskier country, at a higher interest rate. A lot depends on their rating at the time of your purchase and your personal risk assessment. Contrary to popular belief that goes "Greedy fuckers, they never should have bought those Greek bonds", bankers don't actually want to lose money on their investments. That is how you get fired.