Comments on: Why it makes sense to fear Greek default A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: HBC Mon, 17 May 2010 06:53:29 +0000 No jhaskell, the phrase you’re looking for isn’t “welfare state” – it’s Social Contract. As long as you don’t violate it and mess with their basic expectations by gambling away their hard-earned cash, you can get as rich as you like and the plebs won’t drag you out of your gated community, torture and shoot you.

By: johnhhaskell Mon, 17 May 2010 05:54:58 +0000 You can have a welfare state so long as your citizens are willing to pay for it. The problem comes when you have a welfare state and widespread tax evasion. I hope that pointing out that Greece has a tax compliance issue is not a “religious slam,” if their own Prime Minister has said it himself.

By: randymiller Sun, 16 May 2010 11:00:47 +0000 A simple solution would be to negotiate Greece’s exit from the EU, a divorce you might say. Sometimes partnerships do not work, and you need a mechanism for an orderly parting of the ways, something that minimizes the damage.

Ask yourselves the simple question, would Greece be better off outside the EU, and would the EU be better off with Greece outside? It’s pretty obvious the answer is yes.

It is also obvious that the EU has over-reached in its expansion, and needs to shrink back to a more manageable union. Greece leaving the EU would not break up the whole union. And it could set a precedent for the orderly withdrawal of a country where things are not working out.

By: yr2009 Sun, 16 May 2010 02:17:22 +0000 @snowdude
We don’t disagree, basically.
The richer, north European countries could afford to keep their welfare state system going while staying economically healthy, and debt free, but this is no longer possible, since those countries will have to bail out the entire continent through more debt, higher taxes, slower growth and inflation (I.E. stagflation).

It felt good while it lasted, but it will have to end if the Europeans want to maintain the union, which they should, since the alternative of breaking it would be even worse, unfortunately.

By: snowdude Sun, 16 May 2010 02:08:24 +0000 Labels like “welfare state” don’t actually explain the problem. They are like political or religious slams. There are many so-called welfare states in northern Europe doing quite well. I don’t believe that social programs are the problem. I believe the problem is that governments pay for too many of their programs with debt. Those can be welfare programs, social security programs, bank bailout programs, and programs of continuous military campaigns around the world.

By: yr2009 Sat, 15 May 2010 23:39:17 +0000 Forget about Greece –
This crisis is not about that small country on the fringe of the EU, it’s much deeper and broader than that, and it’s composed of several major political, cultural and economic unsolved problems.
The European welfare state system couldn’t be sustained, and it failed. Europe hasn’t been able to generate sufficient growth and enough jobs, and it can’t keep subsidizing large parts of its population, whether they are are social groups or entire countries.
Europe is broke, practically, and its political and economic system must change quickly in order to enable it to compete in the 21 st Century.
This is true for Greece as it’s true for Spain, France and the UK.

By: umeshgeeta Sat, 15 May 2010 20:16:20 +0000 I thought with 1 Trillion Dollar all encompassing comprehensive bailout; Greek default is in rear window. Are we not past that threshold then? The only default will be whatever IMF forces as like ‘private participation’ in re-adjusting these loans.

Three separate points – naturally the thing to watch going forward is to what an extent Euro countries are ready to clean their houses. As ECB’s Trichet and other officials clearly indicated the realization that Euro only ‘bought time’ and the permanent solution still hinges on cleaning the house; is slowly becoming public. So the question is whether European Politicians and Public walk the talk or not. Else ‘dooms day’ scenario for Europeans.

Next, Market is trying to have it both ways – first they wanted Europe to adopt austerity measures and till that wast not happening Market hammered European bonds. Now, that European countries are adopting austerity measures, stocks are getting hammered because Economy is going to miss the ‘demand’. Strictly speaking Market is not wrong – earlier it was bond and now it is stocks. But the question is European Leaders probably need to come honest & clean here to argue that ‘it is the performance against benchmarks’ which matters and Market needs to take that into account.

Finally, the reported rift between France and Germany. Reports are that France essentially formed a front with Spain and Italy against Germany to force Merkel get on the board. That kind of politics will have detrimental impacts in the end – whether rest of the Europeans are able to cow down Germany or at some point Germany simple walks out calling it enough.

By: SteveHamlin Sat, 15 May 2010 18:13:52 +0000 Felix – “And until very recently, Greek bonds were considered to be an interest-rate play, not a credit play.”

Assuming duration is the same, what is the interest rate difference other THAN credit risk?

By: johnhhaskell Sat, 15 May 2010 08:29:38 +0000 The Greek default risk to the entire Eurozone is a red herring to get German taxpayers to open their wallets. The Eurozone was put together by people and it can be changed by people.

In a few more months Greece’s face will be turning purple from the noose the IMF and the Eurozone have draped around its neck, and it will be entirely possible to get unanimous consent for Greece to exit the Eurozone and remain in the EU. Simply stating that getting unanimous consent is impossible doesn’t make it so.

All that is needed is political leadership from Germany and France, which to date has been entirely absent. But the voters of Nordrhein Westfalen now have asked for political leadership, and it’s possible the rest of the German electorate will ask for it too.

By: AGreenInvestor Sat, 15 May 2010 02:30:29 +0000 The European Bazooka which led to a massive short covering rally on Monday has been proven a complete waste in just 5 days. Reports of political and social fissures within the European Union and more importantly the prospect of slow growth in the whole region due to fiscal cuts has led to the Euro falling even below the level of last week.This despite the raison de etre of the bailout being the “defence of the Euro” .Read more at