Comments on: The Greek debt talks fall apart

By: benagyerek

benagyerek — Wed, 25 Jan 2012 22:59:10 +0000

if the greek govt had decided to exit the euro and default on its official debts, it would have no incentive to stop a run on its own banks. a bank run would allow ordinary greeks to preserve their purchasing power in euros prior to a euro exit. the redemption of deposits by greek banks would be funded by euro money created by the greek central bank. that in turn would be funded by credits granted to the greek central bank by the other eurozone central banks via the target2 system. following its exit from the euro, the greek central bank would simply renege on its obligations under target2.

By: TFF

TFF — Wed, 25 Jan 2012 22:00:11 +0000

Cure for falling off tall building — dig a deep hole where the person is about to land, then dig it deeper as fast as they can fall.

Best thing about this cure? When it fails (as ultimately it will), you have a ready-built grave.

The Greece “bailout” is a bit like that…

By: tqft

tqft — Wed, 25 Jan 2012 04:30:49 +0000

I think Greece should lie to both sides, take the bailout money, default on the debt to everyone including the IMF, ECB etc and restructure it’s tax/expenditure system with the money.

Not sure it could get away with it, depending on who actually holds the cash while the deal is being done.

As seen on ZH – the math of more debt for Greece doesn’t work.

By: y2kurtus

y2kurtus — Wed, 25 Jan 2012 02:50:40 +0000

Felix,

Let me propose an alternitve hypothisis for the break down in the talks… the Euro-banks and the Troika have come to agreement that the Greeks have wildly overplayed their weak hand.

A 75% loss rate on the debt of a 1st world democracy is without precident. The default will come in March… the French and Germans won’t throw good money after bad. The 2013 Greek budget will balance (at about 60% of 2011 spending levels) because there will be no new loans IMF or otherwise.

It will not be pretty… the new retirement age will be 75. Wages will fall 35%. Their will be riots and strikes… but 3 years from now things will calm down. $99 4-star hotel rooms and $10/fine dining will pull in tourists from around the world… cheaper labor will pull in new foreign direct investment… even manufacturing will relocate to cheaper eurozone labor. Life will go on!

By: TJ6

TJ6 — Wed, 25 Jan 2012 01:55:31 +0000

So who has the upper hand now, Felix?

By: breezinthru

breezinthru — Tue, 24 Jan 2012 22:43:53 +0000

Words more true were never spoken, Felix.

By: Strych09

Strych09 — Tue, 24 Jan 2012 18:33:29 +0000

JayCM, when word leaks out that whatever currency-printing agency in the Greek government is buying printing presses and/or printers ink in large quantities, it’ll cause an immediate run on the banks in Greece as retail-level savers rush to get their Euro-denominated savings out and into other European banks.

The relevant government officials in Greece understand this, so they’d have to declare a bank holiday in order to prevent this. Of course, when word leaks out that the Greek government is announcing a bank holiday, everybody will assume its to facilitate a default and re-introduction of the Drachma. So there would be a bank run. The relevant government officials in Greece understand this…

By: JayCM

JayCM — Tue, 24 Jan 2012 17:24:41 +0000

There’s an old saying that if I owe the bank a million dollars, I have a problem, but if I owe the bank a trillion dollars the bank has a problem. In other words, Greece should be quietly preparing for a default (probably printing neoDrachma as fast as they can), but any pretense that they can avoid a default is only buying time.

Some industrious sort might be able to make money by finding out what the price of ink has been doing in Greece in the last six months. I’d expect it’s risen due to a big rush print job.

By: Eastvillagechic

Eastvillagechic — Tue, 24 Jan 2012 16:40:39 +0000

does this mean the ECB should accept that giant wooden horse the Greeks want to leave behind in Brussels?

By: Chris08

Chris08 — Tue, 24 Jan 2012 16:02:08 +0000

People have no idea how long the road is down which the can can be kicked. A road stretching almost endlessly, evidently. It seems that Europe will be kicking the can for the next ten years at least.