Greece bankrupt; calls in the IMF

[longfingernails]

news.bbc.co.uk/1/hi/business/8639440.stm

Remember, their deficit is more or less the same size as ours.

Only difference - they are in the Euro, and can't set their own interest rates. We have the freedom to change them.

Thank God we aren't in the single currency.

"What I suspect happened was that he stuck to Ken Clarke's proposals in the first Parliament, which called for paying down debt, because Labour were seen as weak on the economy."

Ken Clarke might have proposed that but when he was Chancellor he never did it. Every year that he was Chancellor the debt went up. The Tories did get it down to nearly 25% but by the time Ken Clarke was done with it he'd taken it up to over 40%.

Again I'm no Brown fan or Clarke basher but both have done enough wrong that we can nail them for what they have done rather than what they haven't.

Maria - It does take both countries to sort out the problems with Turkey. I hope that it can be sorted out, it would be a huge advantage to both of us. However lets not forget that not that much time has past since the last Turkish-Greek war, there is still a lot of bitterness.

I totally agree regarding the church.

Greek Debt is now classified as Junk by S & P.

The ECB are not allowed to accept junk bonds as collateral for their cheap loan window.

If you have money in a Greek Bank (or possibly a European one) Get it out!

Portugal has also been downgraded. Greece is totally screwed after being downgraded to junk; it seems like it is going to have to default.

The Eurozone is falling like a pack of cards.

Good luck to the French and Germans!

P

I

G

S

Italy and Spain next then. What a shambles.

in other news...

"Spending cuts to be deepest since 1970s, IFS says" BBC

Nothing to worry about of course

"Smile and wave boys, smile and wave"

I think it is going to be ruthless

The European bond markets were wild today.

Greek 2 year maturity bonds are now yielding 18.99%. In contrast the yield on a German 2 year bond is only 0.76%. The 18.23% difference in the yields reflects the extreme risk of holding Greek Govt debt versus German Govt debt.

S&P are suggesting that investors in Greek bonds may eventually only get 30 - 50% of their. The danger is that this will spread across Europe to other Govt bond markets. Portugese, Italian, Spanish and Irish bond yields also rose sharply.

Its just a question now how a big a restructuring is required in Greek debt and how much austerity package will be imposed on their populations by the IMF. The next question being asked by the bond markets is which countries they will go after next.

I know people in greece who haven't declared income & paid proper taxes - this needs to be sorted out if the country is to get back on it's feet.

Ireland slashed spending a year back.
15% on public workers at least and upto 20% on welfare.
So now the markets accept they have taken the steps to deal with problem.
For now at least.

Bluecardi, yes, in Greece there is a HUGE problem with tax evasion & general corruption. But the big & tragic problem is that this isn't easily tackled at all! So the people who are going to be paying in this current situation are those who can't tax evade, who can't hide, i.e. pensioners, people with normal salaries etc. There are so many Greek employers who simply do not pay insurance for their employees, and there are a great number of such examples in almost all sectors of greek economy / society.

The people who will pay will not be, I predict, the self-employed who can evade much easier. I respect the current government (much much better than the shambles we had before in Greece) but still they have a tough job on their hands. Maybe an impossible job (although hopefully not).

I find it shocking & sad how much venom one can find these days against greece in the UK press. Yes, Greece has tragic problems & huge corruption, but surely there has to be compassion for the fact that those sectors of Greek society who are in most need are suffering at the moment terribly because of the crisi. And also, surely, there has to compassion because Greece is only one part of a wider (international) economic problem. Its own problems definitely didn't help it weather the crisis. But surely it should be helped, a country (a society) is NOT just a bunch of numbers, it's not a business.

Greece thus should be helped, I think this will help the whole of Europe. Then the question though is whether the tough measures taken in Greece will actually be implemented properly & whether they will work. As every Greek surely knows, the corruption & tax evasion etc etc is such a huge problem & its roots go so deep that we're all pessimistic... I personally try to be optimistic because I trust the current government but let's see...

Maria2007loveshersleep

No-one wants Greece to go bankrupt - but at the same time, its own decisions led to its downfall, and it is a salutary lesson for the Brits.

You can't join a single currency with interest rates designed for Germany and expect to integrate.

You can't borrow forever. The reckoning has to come.

You can't have lax public spending forever.

You can't have widespread corruption and tax evasion forever.

Greece didn't have the political will to deal with their deficit when it was still feasible.

Ireland did. They took the tough medicine last year. I am glad they are finally showing signs of growth:

www.guardian.co.uk/business/2010/apr/26/bank-of-ireland-refinanced

I just hope that the British public is sensible enough to elect people with the courage to cut the deficit whilst it is possible to plan them sensibly - otherwise we will have to take far more painful emergency swingeing cuts.

By the way, today headline in BILD newspaper (German equiv of Sun) was "German taxpayers fund luxury Greek pensions"

The Economics Weekly (= German Economist), had a chirpy headline that basically said "Debt crisis, Is Britain next?"

Elenio - re "due to ongoing issues with Turkey, Greece spends a large %age of its GDP on weapons. If Greece had the support of Europe we would not have the need for these weapons (...)
It does take both countries to sort out the problems with Turkey.)

I wasn't going to get involved in this pathetic blame game ("It's all because of those mean Turks" ), and I do realize sudden bankruptcy makes people say strange things, but seriously woman, get a grip.

I agree with most of WhosYourDaddy's analysis, but I don't think Greece will default. Some debt structuring appears possible although is denied by Greeks and some other parties. However, default will sink the boat that all Euro countries are in, and they will not allow this to happen.

However, there is no such "boat" for the UK, so if the UK finds itself near a similar abyss, I doubt if EU countries will be so enthusiastic about providing funds.

CoteDAzur

Well, the "boat" we have that the Greeks don't is that our currency can devalue when necessary.

Indeed, it has done precisely that over the last couple of years.

Luxury greek pensions????!!!!!

The lowest pension at the moment in Greece (lowered recently by the government) is 350 euros. Think of it.

Luxury greek pensions indeed...

By the way: Cote d'azur I agree with you wholeheartedly, greeks are deluded (or a vast majority is) with turkey-hatred and with strange ideas about 'foreigners who hate Greece & are the cause of Greece's problems'. One big step for Greece (maybe not related to the current financial situation, but interesting anyway) would be to get over such greece-centred, nationalistic delusions that are certainly not helping anything go forward. The issues of Macedonia & Cyprus being good examples. I'm not saying here that Turkey is the 'innocent' one here (I'm not interested in good or bad labels anyway) just saying that a big part of Greece's problem is its nationalistic grandeur that, perhaps, has not helped it deal with its problems- including financial ones- earlier.

But in any case, as for the financial problems, I do think Greece has issues (huge ones, yes) but I also think that Greece is only a small part of a much larger economic crisis that has to do with everyone. So Greece shouldn't be left alone to deal with the crisis, it shouldn't be made the scapegoat in all this.

Cote d'azur - I think my post was not particularly clear and possibly came across wrong.

I do not think at all that it is because of the 'mean' Turkish people. I think that Greece is just as much to blame for the situation and you are right, it is pathetic and needs to be solved. Greece is very reluctant to take any blame as a country and this is one of our major downfalls.
My point is that if Greece and Turkey are unable to solve their problems (which they clearly are unable to do) then the EU (of which Greece is member) should step in and help.
Anyway maybe i am not making my point as clearly as i want but please do not think that i find Greece blameless and that i 'blame' Turkey. Most sane Greeks want to solve the problems so that we have no need for national service and for such a %age of our money to be spent on weapons.

I found your post rude.

As far as the pensions being high, that is a joke. My Grandmother has a pension of 500€ a month (do not forget that there are no extra benefits in Greece). It is very hard to survive on €500 a month.

I hope that with the new tax laws that have been introduced they will finally get some control over tax evasion. I am not holding my breathe though.

"BTW the P I G S are Portugal, Ireland, Greece and Spain. Not Italy."

It's PIIGS and includes both Ireland and Italy...

Elenio - Problems between Turkey & Greece are not pathetic. Your tendency to blame Greece's economic problems on its problems with Turkey is.

First and foremost - There is ZERO chance of Turkey attacking Greece and taking on the entire EU.

Second - Greece spends $6bn on defense per year and has 545,000 total troops. Turkey spends $49bn on defense per year and has 1.1mn troops. That Greece is keeping up with Turkey by spending oh so much on defense is a laughable idea.

Third - An imaginary arms race with Turkey didn't bankrupt Greece. Greece's excessive borrowing and carefree spending bankrupted Greece.

I did not intend to blame Greece's economic problems on the situation with Turkey.
I am well aware of what a drop on the ocean that is compared to what Greece owes.

My point was more about weapons being sold to Greece by Germany (and other European countries)
www.reuters.com/article/idUSTRE62M1Q520100323