David Lock

If there are any still running that is

Having watched the news over the last few months/weeks and seen Greece brow beaten into all sorts of painful austerity measures - all making sound economic sense I am sure - I do have a lot of sympathy for the ordinary folk out there who are being hit hard.

I haven't been to Greece for some years but they seemed a pretty decent bunch of folk getting on with their lives and it's hard to blame them for having years of corrupt and inefficient governments with the rich doing what rich people do i.e. avoiding paying taxes if they can.

I just don't know enough about detailed economics to know what would happen if they bale out now and dump the foreign banks in it big time (yeah I have heard about the dire consequences for EC stability)?

I guess with no debts to pay back they can still generate some foreign currency, shipping, tourism etc which will keep the country going although of course the Drachma will fall through the floor and cost of imports will be horrendous.

So what do you reckon?

dl

jods

It's all Greek to me

madscoob

iTrader: (3)

cheep holiday next year

Suresh

Dude they've never paid any taxes at any level let alone the rich, have been living off credit and wonder why its all going **** up. Hairdressers retiring at 50, police at 55 and a profligate Socialist government of their own choosing spending it all. I don't feel sorry for them in the slightest, let alone want to give them all my money to stop them ending up in the poor house!

The best thing they can do is default and get the fork out of the Euro. Then they can inflate their way out of the remaining debt and start again in 5-10 years. People have short memories in finance and they'll be lending to Greece in no time at super cometitive rates because their competitors will be doing it already.. AARRRGH.

European politicians are happy to sacrifice a big share of their own future national income to keep the EU dream alive by filling the money pit and stopping them from defaulting . Its just not worth it.

Concerning banks, under new capital adequacy rules (BIS-III) banks are to be encouraged to lend to sovereign nations but not to other banks. What a great idea that is! French and German banks will need state support or their liquidity will dry up as the market will close for them. Greek banks will go under of course and take any savings that have been left behind with them - can't imagine anyone in their right mind would leave their savings at a greek bank right now, which must be killing their funding as on the lending side, you can't just call in all your loans like that. The big Euro banks can't lend into the economy anymore if Greece hits them hard and what little growth there is will stagnate.

Trout

iTrader: (1)

Suresh it is not that they are encouraged from one and not the other.

Under the old rules, certain asset classes were allowed to be carried in lieu of core capital. The big mistake was that RMBS such as CDOs and corresponding CDSs were permitted.

BIS-III states that the only debt permitted to be held as core capital is sovereign debt.

But that has not changed - T-Bills have always been allowed for example - as have pretty much all Government bonds.

So I don't see a switch to sovereign instruments - more a switch away from non-sovereign instruments.

Banks can still lend to each other - they just can't (rightly in my view) count it as part of their core capital.

kingofturds

iTrader: (1)

Greece should have never been allowed to join the eu anyway. total basket case economy right from the start .

Trout

iTrader: (1)

Indeed!

velohead66

+1

Leslie

How can they expect to be able to run a country without paying any tax?

Les

Suresh

The Liquidity Coverage Ratio (LCR) will require institutions to hold "HQ assets" such as sovereign debt in order to survive a liquidy crisis. Some institutions already switched asset class into Govvies to try to meet this requirement, so I'm reliably informed.

Bubba po

I don't understand any part of this thread.

Suresh

You're the lucky one

stedee

iTrader: (4)

when you realise how countries organise their finances you have to laugh, e.g the labour government. i`m not particularly political but after understanding what they were doing financially i would crack all their heads together, idiots, the irony is we taught the eastern economies how to do it in the 20th century and then do the total opposite ourselves.
still cant believe no -one really knows what banks are holding toxic assets and how much of them they hold.

David Lock

Well hat's off to Europe's top economists

It's taken a few weeks and many cancelled golf rounds but they have now reached the momentous and startling conclusion that Greece does not have enough money to pay off all its debt and is never likely to be able to do so.

Phew

dl

Leslie

But have they worked out what to do about it, or is that too much all at once?

Les