Greece - Bailout or Default or...

[nichola]

The two options facing Greece are default or bailout - the Economist argues that there is an alternative

"There is an alternative, for which this newspaper has long argued: an orderly restructuring of Greece's debts, halving their value to around 80% of GDP. It would hardly be a shock to the markets, which have long expected a default (an important difference from Lehman). The banks that still hold a big chunk of the bonds are in better shape to absorb losses today than they were last year. Even if Greece's debts were cut in half, the net loss would still represent an absorbable proportion of most European banks' capital".

Read the full article here - it is informative and makes for an interesting read

http://www.economist.com/node/18866979?Story_ID=18866979&fsrc=nlw

[Eric]

To a layman like myself this seems to be the only sensible option.  It is not a quick fix though, as the article goes on to say;

"An orderly restructuring would be risky. Doing it now would crystallise losses for banks and taxpayers across Europe. Nor would it, by itself, right Greece. The country's economy is in deep recession and it is running a primary budget deficit (ie, before interest payments). Even if Greece restructures its debt and embraces the reforms demanded by the EU and IMF, it will need outside support for some years. That is bound to bring more fiscal-policy control from Brussels, turning the euro zone into a more politically integrated club. Even if that need not mean a superstate with its own finance ministry, the EU's leaders have not started to explain the likely ramifications of all this to voters. But at least Greece and the markets would have a plan with a chance of working."

"This last option would entail a long period of external support for Greece, greater political union and a debate about the institutions Europe would then need. But it is the best way out for Greece and the euro. That option will not be available for much longer. Europe's leaders must grab it while they can."

But I just love the comment in the opening sentence, it just sums up the dithering of the EU;

"THE European Union seems to have adopted a new rule: if a plan is not working, stick to it."

[BM06]

Looks like the Greek government are bying gold so maybe a default is on the cards?  http://www.dailymail.co.uk/debate/article-2008068/WILLIAM-REES-MOGG-The-Greeks-buying-gold--you.html

[Colwyn]

The current strategy has nothing to do with bailing out the Greek economy or bolstering up the Euro - despite the fact most friends and foes of the policy portray it in this way. The intention of EU financiers, and their advice to the Commission, follows the long-standing programme of the IMF and World Bank, which is to use tax payers money to fund governments on the brink of defaulting so that they can hand over this money to the large-scale private foreign investors who  are creditors of their countries. The goal is that there is to be no loss suffered by financial capitalists in Europe and North America. The Economist's argument, though plausible for the rest of us, does not meet the requirements of this financial elite.

[stoop]

The Euro was always an experiment which was going to turn into a failure. Best to take the hit now and get rid of the damn thing in my opinion. Greece now - Portugal to follow and Spain also on the brink. We're all doomed thanks to this Euro dream.

[nichola]

Just throwing this into the mix as I go out the door - but I caught a news clip yesterday that showed the Chinese arriving in Europe to "help us out" and being welcomed with open arms.

China is intent on global expansion and has of long history of exploitation and human rights abuses well documented at home and abroad, in Africa for example.

Is this really what we need or want to see repeated on our own doorstep?

I haven't had a chance to catch up on more of this "breaking news" so would welcome any more information on this development.

[barry44544]

You know how it is........ Have one chinese loan and you'll want another one in an hour !!!!!!

[nichola]