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The Greek debt crisis....why?

999 replies

InDespair · 27/06/2015 17:24

cant find another thread about this so.....

Before anyone accuses me of being thick or burying my head in the sand, I can';t always watch the news in full, and I dont read newspapers. (and Im sure others are wondering too).

Who exactly is in debt?

the people?

the banks?

How did they get themselves into this mess, and why and how do they expect a bailout?

what have they spent all their money on?

And what about tourism?

Laymans terms please.

OP posts:
Gemauve · 27/06/2015 19:29

The interest rates are high and IMF usually gets involved, but they agree upon the conditions and release the funds.

How's borrowing from the IMF working for Greece this week, would you say?

Hannahouse · 27/06/2015 19:52

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CoteDAzur · 27/06/2015 20:05

Gemauve - Just reread my previous post and saw that you thought I was referring to 2000 as "recession". I was talking about when UK opted out of EMU - it couldn't keep up with high interest rates after German reunification and pegging the currency to German Marks was a disaster. The point was that UK had obvious and recognized issues when it voluntarily opted out of the common currency. Greece had no such recognised issues, mostly because it lied about its numbers.

CoteDAzur · 27/06/2015 20:08

"How's borrowing from the IMF working for Greece this week, would you say?"

This week? Not great. Next week? It might happen if they eat humble pie and agree to conditions. Which they will, if they realise EU won't bail them out forever. This will happen ages before they are in danger of starvation or mass death because they can't buy any medicine or fuel. The drama on this thread is totally unwarranted.

CoteDAzur · 27/06/2015 20:21

"How else do you think countries outside the Eurozone do these things?"
"Those without strong convertible currencies? How are things in sub-Saharan African right now?"

Oh, boo hoo. Sub-Saharan Africa, no less.

Check out Armenia, Bosnia, Ukraine, Albania, Georgia and Serbia. All are IMF loan recipients. None have strong convertible currencies. And none are all-starving & all-warring à la sub-Sahara.

Greece will manage, too. It will get some IMF loans, shape up its public sector, whip up its population to work and pay taxes, and generally get its act together. It will not become a third-world purgatory with mass starvation etc.

Gemauve · 27/06/2015 20:27

Check out Armenia, Bosnia, Ukraine, Albania, Georgia and Serbia.

none are all-starving & all-warring

Well, Ukraine has got a real live shooting war going on. Bosnia has had a fairly recent real live shooting war. Georgia has had a fairly recent real live shooting war. Serbia has had a fairly recent real live shooting war. Armenia has had fairly recent real live shooting war. Albania was kept from having a real live shooting war by a large UN peacekeeping force, but its entire economy was in collapse at the time. They're not great exemplars of a sound future.

CoteDAzur · 27/06/2015 20:42

I guess you are just determined not to get what I'm saying.

Bosnia's was was 20 years ago. So was Armenia's. Serbia hasn't been in war in the last 15 years. They are fine. Their people aren't starving. Nobody is financing their lifestyles and yet they are not "sub-Saharan Africa" as was your hyperbole re Greece's future if EU doesn't continue to support it.

Greece's democratically elected governments borrowed money and now the country is responsible for its repayment. Yes, it's tough. No, it's not anyone else's problem. They don't pay taxes and have a hugely subsidised state sector. They need to stop whining and get their act together. It is completely unreasonable to expect the rest of Europe to finance their country, especially with the bizarre argument that they might become a sub-Saharan warzone if we don't.

Gemauve · 27/06/2015 20:47

You're missing my point, too. I couldn't care less if Greece's economy collapses, and I certainly don't think we should prop it up. I think the population might like to consider just how much worse things will get if they don't drink the medicine (paying their taxes, for example) that you and I are both saying they need to. We just differ over the scale of the economic collapse they face, that's all.

Hannahouse · 27/06/2015 20:49

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CoteDAzur · 27/06/2015 20:52

So we agree. Their economy has already collapsed. The only thing keeping it up is cash injections from the rest of EU. Greece will toe the line as soon as EU pulls the plug. All their political posturing and spoiled child act will cease if they are kicked out of the Eurozone and they will go to IMF with their hats in hand.

It will never come to starvations and shortage of medicine.

CoteDAzur · 27/06/2015 20:55

Hanna - Do you have any idea how much "bailout" was already forked out to Greece since the beginning of their meltdown?

IrenetheQuaint · 27/06/2015 21:01

Greece is not helped by having a poor tax base and vast black economy... Which post-2010 Greek governments haven't sufficiently addressed, so the middle and working classes have really suffered from cuts and job losses while the rich just move their funds out of the country.

Gemauve · 27/06/2015 21:08

the middle and working classes have really suffered from cuts and job losses

The tax evasion and black economy are not the sole preserve of the rich.

sunshinerunner · 27/06/2015 21:16

I'm being dim here too but if they were to leave the Euro wouldn't they become more attractive again as a tourist destination and therefore markedly increase revenue?

IrenetheQuaint · 27/06/2015 21:18

Well yes Gemauve, that was a generalisation... But I have read a lot of coverage reporting real hardship for people reliant on state services, especially health, and the unemployment rate is hideous.

Hannahouse · 27/06/2015 23:41

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ToysRLuv · 27/06/2015 23:53

Have very little knowledge of what has been going on behind the scenes and while my Greek family have always paid their taxes, there is a cultural idea of "only idiots pay taxes" in Greece. There is a looots of tax evasion from grass roots level to very rich individuals and institutions, as well as "the little envelopes" corruption.

Now, at least public sector jobs have attrocious pay and nobody can afford to retire. People I know who are well educated engineers, architects, and social servants cannot afford to heat or cool their homes. Several people die in the winter cold and especially in the heat of summer. Suicides at the local suicide spot (large waterfall) have multiplied. I don't know ehat needs to happen, but it needs to happen fast. Sad

ToysRLuv · 28/06/2015 00:04

Should be "but" instead of "and" in middle of the first sentence..

Isitmebut · 28/06/2015 00:12

How many countries have failed to pay back the IMF the money they owe, as I can't think of any?

As they tend to be the lender of last resort, the terms are never easy, that's why a country needs to face its own economic/debt problems earlier - as they have a few more options pre IMF.

The UK called out the IMF to financially bail us out in 1976, I don't remember their terms back then, but around that time we stopped throwing taxpayers money at inefficient nationalised industries, I suspect that there was a connection.

Greece pre crash, like many other EU countries including Ireland, took advantage of the very low Eurozone interest rates offered to them, as lenders saw some implied guarantee by the EU as a whole.

Greece's economy was too inefficient State top heavy, the private sector held back by red tape, and they were not collecting their taxes - so hardly a viable country economic model, never mind in any comparison to Germany.

Sure some of those problems have been addressed, but the election of a left-wing government and their views of how an economy should be run, was NEVER going to receive the confidence of their debtors to throw good money after bad, unless real reforms were made.

I believe the latest Greek plans were basically to tax businesses already struggling, while keeping most of the unaffordable State, which would have meant less revenues to pay the governments Fixed Costs - which IMO both explains why they were rejected and underlines their inability to make the right/tough decisions going forward - in or our of the EU.

Viviennemary · 28/06/2015 00:15

I've watched a bit about this over the last few weeks and it is hard to understand. Greece hasn't the money to pay it's debts, the country is practically bankrupt but they won't cut back because folk have voted against 'austerity'. So what's to be done. They want to stay in the Euro. Goodness knows why. They should just go back to the Drachma IMHO. They can't just keep borrowing money and not paying it back.

Gemauve · 28/06/2015 10:09

They should just go back to the Drachma IMHO.

"Just" is a fascinating word. How easy do you think that would be? Would you accept a drachma in payment for anything?

MrsUltracrepidarian · 28/06/2015 10:21

"Just"
Hmm

MrsUltracrepidarian · 28/06/2015 10:28

Argentina tried to get out of paying back the IMF, but ultimately did. Greece can't be allowed to or the IMF would never be paid pack again by anyone.

Viviennemary · 28/06/2015 12:07

That was an unfortunate choice of words, I apologise. Of course it won't be easy but something was said along the lines that the Greeks need to devalue their currency to get out of this mess and of course they can't devalue the Euro. I suppose it depends in the long run which is the worst scenario. But I agree the Greeks must repay the money or it will give other countries carte blanche to default as well. Thank goodness the UK didn't join. We have Gordon Brown to thank for that.

MrsUltracrepidarian · 28/06/2015 19:13

I think most economists agree that Greece would be better off out of the Euro for the reasons you give VivienneMary - its the EU for political reasons that have tried every contortion to keep them in - even breaking ECB rules to prop them up when they are insolvent.