Eurozone will collapse...

[Kursk]

Originally Posted by Ignitionnet

Well, it needs a helping hand rather than being loaded with debt to pay off Eurozone banks who lent it money in the past so that they don't have to suffer the consequences of the bad loans they made.

The Greek bailouts have been nothing of the sort. They have been Greek creditor bailouts. A small fraction of the money has actually gone to Greece.

Moral hazard for the banks completely gone. They can lend however they like knowing the taxpayer will pick up the tab, so they can continue to act like asshats, pay themselves huge bonuses based on the dodgy loans, and pass the bill when it goes bad to taxpayers. A great deal indeed.

Economics are beyond me. I was thinking more of a gift with no strings attached. We are not in the eurozone but we could lead and influence others by re-routing our current foreign aid to Greece. There has to be something different to break this deadlock without breaking Greece imo.

Greece needs it debts written off. That would be a gift of sorts. It won't happen though, so Greece will eventually have no choice but to simply write them off itself, by defaulting and then ditching the Euro and reinventing the Drachma.

[nomadking]

Apparently a chunk of the debt(£8bn?) is held by Greek pension funds. Greek pensions would continue to go down the drain.

Their problems are not all down the the Euro or even the EU. How is a pension system that allows many to retire at 55 or allows non-married women to inherit the pensions of their parents ever going to work?

Any fudging of the books before the entered the Euro is proof that that the Greek Economy was rubbish to begin with. Their problems are systemic and will continue while they ignore them. Nobody is going to want to invest there. That is not going to make it any easier.

Originally Posted by Chris

Greece needs it debts written off. That would be a gift of sorts. It won't happen though, so Greece will eventually have no choice but to simply write them off itself, by defaulting and then ditching the Euro and reinventing the Drachma.

How is that going to help though if they have no willingness to reform their economy and society? They can default on their debt and adopt their own currency again but who is going to lend to a nation where the money goes down a black hole and who has recently defaulted on their debt?

Originally Posted by Damien

How is that going to help though if they have no willingness to reform their economy and society? They can default on their debt and adopt their own currency again but who is going to lend to a nation where the money goes down a black hole and who has recently defaulted on their debt?

Oddly enough, Dan Hannan made a similar point in the Tele yesterday. Never thought thee and he would agree on much.

You are right; default, devaluation and money-printing is not a solution and in the long term it is damaging. The judgment call is whether it is more or less damaging than the alternatives. What it can do is buy time for reforms to be implemented. Unfortunately, as Hannan pointed out, the reforms necessary are the ones Greece has been undertaking as the conditions of its existing bail out, and which Syriza was elected specifically to undo.

As things are, with Greeks unwilling to reform their economy, default would not help. However, keeping them hooked on debt from the IMF or the other EZ states isn't helping either and the country is sinking further into the mire despite now running a modest primary surplus.

The only way they are going to get debt relief is to default. Then, it is to be hoped, they will realise that the means to balance the books are within their own grasp. They may be more willing to act sensibly at that point, or at the very least, the complications brought about by default and ejection from the Euro might keep them too busy to do anything very stupid.

On a related note, I see that clown Martin Schulz has popped up to say that if Greece leaves the Euro, it will also be kicked out of the EU. I suspect that somewhat batty assertion tells us more than Schulz intended about how likely an imminent Grexit now is.

With any luck, this whole debacle is going to necessitate a treaty adjustment which Cameron can hang his own renegotiation plans on.

[Osem]

What do those who were complicit in Greece to joining the club have to say about it now or have they just quietly sidled off to enjoy their generous Euro pay and perks? We're having all sorts of investigations into and punishments handed out to the banks but what about the highly dubious creative accounting and political string pulling which allowed this train wreck to happen?

I can see Putin rubbing his hands with glee not only because he might see an opportunity in Greece's exit but also because it could well lead to others leaving the club and possibly put an end to further ill judged expansion.

[Osem]

International Money Fund (IMF) boss Christine Lagarde has warned there is "no period of grace" for Greece over a debt repayment deadline.

She said Greece would be in default on its loans from the IMF if it failed to make a €1.6bn (£1.1bn; $1.8bn) payment on 30 June.

http://www.bbc.co.uk/news/business-33177021

Merkel on the other hand believes:

that a Greek debt deal was possible.

Are they playing good cop, bad cop?

Yes, and Martin "Greeks get on my nerves" Schulz is messing with the format by playing Mental Cop.

[Osem]

Well I'm sure all the festering animosity will be forgotten by the Greeks in another 10,000 years or so...

[Ignitionnet]

Originally Posted by Chris

Yes, and Martin "Greeks get on my nerves" Schulz is messing with the format by playing Mental Cop.

Oh he and our resident adorer of the British Guy Verhofstadt have been putting their, completely impotent, oar in.

Both can actually sod off, this is not within their competence, not that Verhofstadt has one, or indeed any.

[Osem]

An emergency summit of leaders from eurozone nations will be held on Monday, after the latest attempt to resolve the Greek debt crisis failed...

... Head of the Eurogroup, Jeroen Dijsselbloem, said that "too little" progress had been made and that "no agreement as yet is in sight".

Greece has less than two weeks to strike a deal with its creditors or face defaulting on an existing loan...

... Greek Prime Minister Alexis Tsipras said on Friday that there would be a solution to Greece's debt crisis.

"The [eurozone] leaders summit on Monday is a positive development on the road toward a deal," Mr Tsipras said in a statement.

"All those who are betting on crisis and terror scenarios will be proven wrong."

He added: "There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro."

Mr Tsipras is due to meet Russia's President Vladimir Putin at an economic forum in St Petersburg later.

http://www.bbc.co.uk/news/business-33194917

I'm sure that's not a co-incidence.

[Gavin78]

wouldn't surpise me if Russia bails Greece out then Greece defaults on paying Russia back and then Russia invades Greece for that reason.

Or

Russia bails Greece out in some kind of shady deal where by Russia tries to start up it's own EU

Or Russia bails Greece out but then has Greece as an ally in some kind of back door hand shake. wouldn't surprise me if Russia with all it's billions tries to buy the country

[Osem]

I'm sure all sorts of games are being played right now. Given how they've suffered and the mess they're in I don't suppose the Greeks will rule anything out.

You may find this Chatham House report on the Russian economy of interest...

http://www.chathamhouse.org/expert/c...GNsaAt6V8P8HAQ#

Fragile economy

Scratch the surface, however, and it is clear that on other economic indicators the picture is less benign. Prices continue to rise, with annualized inflation reaching nearly 17 per cent in March. Industrial production, although boosted by the weak rouble, remains anaemic. Investment, which as a proportion of GDP is already comparatively low, is falling rapidly, with a year-on-year decline of 5.3 per cent registered in March. Taken together, these indicators of activity in the real economy suggest that GDP, which unexpectedly grew at the end of 2014, may have fallen by around 2 per cent in the first quarter alone. These data hardly augur well for a sustained and broad-based return to growth.

The rally, to the extent that there is one, is focused largely on the rouble. But the wider economy is performing badly. More worryingly, even this narrowly focused strong performance is precarious. Should oil prices begin to decline again, perhaps as Iranian oil increases global supply, or if fighting in Ukraine intensifies, confidence could evaporate just as quickly as it returned in recent months.

The gyrations of Russia’s short-term economic performance also divert attention from the fact that Russia is afflicted by a severe and prolonged slowdown in the rate of growth. The system of political economy that has existed for the past decade and a half is no longer delivering an acceptable rate of economic growth. Most senior policy-makers acknowledge this. But thus far, the Kremlin has showed no appetite for undertaking the type of reform needed to fix the severe problems that are holding the Russian economy back.

Unfortunately, the policy response to the economic downturn and Western economic sanctions threatens to increase state control and make the economy more introverted. Rather than strengthening property rights, boosting competition and creating the conditions for accelerated private investment, the leadership is instead considering a wide-ranging import substitution plan to insulate Russia from the global economy. It is also allocating scarce public funds to help inefficient but politically well-connected enterprises. While these policies satisfy powerful constituencies close to the Kremlin, they do nothing to address the acute structural challenges facing the Russian economy.

[Osem]

No doubt those severe structural challenges account, in part at least, for why Putin has been quite happy to stir up trouble and nationalist sentiment. He needs an excuse - someone else to blame.