Greek Debt Crisis

[Colwyn]

The BBC website has a decision tree so you can input and track your guesses on the economic future of the country and see what thir expert/s think will happen depending on which path you follow. Guess what? It's going to hell in a handcart.

http://www.bbc.co.uk/news/business-14977728

[GordonA]

And a turbo-charged hand-cart at that, Colwyn.[!][!]

[Colwyn]

The most recent minister to resign over the current negotiations is Deputy Foreign Minister Mariliza Xenogiannakopoulou. I bet you're glad you're not the BBC newsreader who had to say that.

Just as seriously, would Greece be better off accepting the current EU deal or in fully defaulting on its debts and being thrown out of the Eurozone - and, probably, the EU - and then controlling its own destiny from a debt-free starting point? Plenty of countries have just that and for some of them it has proven successful - a recent example being Argentina in 2002. I think it is worth considering.

[GordonA]

I believe that Greece should follow the 'Debt Free' start again option, & get out of the whole mess that is 'Europe', And, take us with them !!

[usedbustickets]

I still think that the Greeks are better off with the default solution, whatever it does for their part in the European project.  A painful 3 or so years rather than 30 odd years of misery with the austerity solution.

An important part of the default strategy is you have to keep the local banks/ATMs  - and their branches abroad - shut or at the very least severely restrict what people can take out/transfer.  Tight controls at first and then a slow release as other economic factors improve, as surely they will.

[Ovacikpeedoff]

The problem is that what is best for Greece may not be the best for the financial world. The world is really at the mercy of the Greeks in the knock on could be huge. Huge not only in debt write off but lending to countries like Italy and Spain could stop and they will have no option but to default.The ripples from Italy and Spain will work their way through the whole of Europe and beyond. The UK will take a big hit as well. Over the past few weeks banks are not even lending between themselves overnight as they are depositing billions with the ECB. This is because of fear of the next major collapse.

Being Irish, I have been looking at the Irish situation and the effects of the bailout package on the country and the people. Implementing the bailout conditions is driving Ireland towards a 3rd world country. Unemployment on the rise, front line services being cut, hospital beds being mothballed and the worse off having their benefits severely cut. Poverty has returned with a vengence to Ireland. The main asset a highly educated workforce heading off to all parts of the world. As UBT said above 30 years of misery.

Yes countries like Ireland and Greece need austerity measures. The problem is that ECB and the IMF want too much introduced too quickly.What should behappening now is to steady the ship and when growth returns then the screws can be tightened more.

From a Greek perspective the pain will last much longer than 3 years and I would think it will be much closer to 10 years or more. Because Greece is so integrated in the Euro that they will firstly have to unravel themselves from the Eurozone. They will then have to rebuild their own banking structure and introduce a new currency. They may have to deal with the total collapse of the world financial sytems.

[FrankStanley]

Like the banking crisis of 2008, If we had let the defaulting banks to go to the wall, we would be better off now and the shareholders who accepted the risk would be crying, not the taxpayer.

[Ovacikpeedoff]

Unfortunately leaving the banks go to the wall would have resulted in millions of ordinary working people losing their savings as well as the shareholders losing their investments.

[Colwyn]

quote:Originally posted by Ovacikpeedoff

Unfortunately leaving the banks go to the wall would have resulted in millions of ordinary working people losing their savings as well as the shareholders losing their investments.

I'm not certain about this, perhaps you could explain a bit more.

I was under the impression that in 2008 the UK Government guaranteed 100% of the value of the first £2000 of bank deposits and 90% of the value of the next £33000. Above £35000 you would have lost all your savings unless you had wisely decided to open a saving account with a different bank for savings over £35k. The new Labour Government's first reaction to the banking collapse was to increase the level of guarantee to £50k and the coverage to 100% (something for which I think they should have been given more appreciation than they were). So no personal saver would have lost all their savings and even those with more than £50k would have been OK if they they split it between banks.

If the banks had been allowed to go bankrupt HMG would have had to shell out huge sums of money but - as a guess - this could well have been much less than the bank bailout cost. But perhaps I am misreading the situation in 2008.

[Ovacikpeedoff]

Total household deposit saving in 2009 exceeded £1,200 billion. There was no way that the government could afford to subsidize that amount.There is this frenzy about bonuses and whether banks should just be left go to the wall.Just looking at the collapse on the basis of bankers bonuses and the compensation scheme is too simplistic. Allowing 2 or 3 of the main banks to collapse would have had serious complications for the whole UK economy.

The whole issue of the bailout was to maintain confidence in the banking system. The UK currently has debt in excess of £1 trillion. We continue to run a deficit so this debt continues to increase and has to be borrowed.If the banks were left to collapse we would probably be in the same position as Greece and not able to finance our current level of spending.

The other side of the balance sheet is lending and although lending has virtually come to a halt it is still necessary for UK institutions to have the ability to borrow. Growth in the UK economy will always take place on the back of borrowing.

I am not defending any of the banks and they were wreckless. They were making profits on a house of cards that was always likely to fall down when an ill wind turned up. Do not just blame bankers and their bonuses, the blame also lies with many of the supporting players like the government and the regulators.

The biggest problem for the Uk is the city of London. The size of the UK banks should be about 20% of what they are. The UK punches way above its weight in relation to the size of the economy as aginst the size of other countries.

At the end of the day the government did not bail out the banks it was the taxpayer.