Another month another cliffhanger

[Suff]

Greece is coming up to crunch time. The lenders have not changed their tone one bit. "Stand and Deliver" is the message and the Greeks retreat one small step at a time.

However the leeway for retreat is shrinking. If no deal is done by Friday, then the Greeks are now generally muttering about an election. Which would be interesting because Syriza would probably come out of that as clear leader with no coalition.

Of course, then there is the "what if a deal is made".

That one is quite interesting. The deal is for a final block of €7.2bn of bailout funds.

So Greece is currently broke. The banks are living on ECB drip feed to stop the ATM's drying up and Greece has commitments to service.

So the BBC article has the best breakdown for the next 3 months.

If you add those figures up for the next 3 months, the EU and IMF repayments are more than the requested €7.2bn. The next shocker is the more than €5bn in short term bonds which must be rolled over. I had a look at the historical tables and they could have rolled them over at a 2% yield in July 2014. Today? 21% for 3 year (short term) debt and 15% for 5 year. Even 10 year at 10.95% is not sustainable with inflation running at less than 1%.

So, in September does the debt repayment go away?

Erm, no, it's somewhat like that to the end of the year.

So, what will they do in September? They're broke, the government is raiding funds now that are sequestered for other things. They're still going to be broke in September.

Is the EU and the IMF going to agree another €30bn in bailout funds to pay for the next year of debt repayments???

It can only end in one place. The only question is when, not if.

[Workingman]

There has been a meeting this morning over fudge and sticky toffee pudding.

At least the likes of the BBC's Robert Peston have stopped all their screaming of Grexit from the € and Greece being kicked out of the EU (there is no mechanism for that to happen) and the collapse of the EU and the sky falling in and blood on the streets.

The choices for Greece have always been quite simple: Default and face the consequences; keep borrowing money to pay off the interest on the money you are borrowing (a crazy scheme); or get its creditors to park the debt, or some of it, and get the Greek economy working again.

The problem for the creditors is to manage the debt and management has been missing from all their dealings - Piss up and Brewery spring to mind.

[Suff]

I replied to this but the site ate it....

So, really, yes the creditors should be looking for an answer to the debt reconciliation. But they aren't, they are looking for a way to make the PIIGS pay for their own mistake.

The one phrase you are not going to hear much of is "Irresponsible Lenders"....

Which means it WILL happen again. And again ad nauseam...

[Workingman]

With this kind of debt there are responsibilities on both lenders and borrowers and it seems like folly for the lenders to put their debtors in a position where the debt can never be repaid.

I do not really know what the answer is, but constantly bashing Greece cannot be it. Growing the Greek economy is the way to go, but that will probably need both sides co-operating in running the Greek economy. I am not sure that Syriza can live with that solution or sell it as workable to the Greek people.

[Suff]

It was an interesting voyage of discovery when I looked at the financial history.

Back in the 1800's the bankers lent Greece money to wage a war of independence. This money then crippled the country for decades thereafter, with a Troika of countries set up to "enforce" repayment, the imposition of a Prince and other overbearing actions by the debtor nations.

After WW2, Greece was taken over by a military dictatorship. Greece then experienced good growth, low interest rates and a balanced budget.

Until, of course, in 1973, there was a civil war to oust the dictatorship, funded, yes you've guessed it, by the banks. Followed by three decades of instability, high inflation, low growth and an unbalanced budget.

Greece ended this phase with uncontrolled borrowing, on the strength of the emerging Euro.

Until it came time to pay it back again. Which is where we are today.

In every case since the late 1880's Greece has been messed up by bankers (or countries), willing to lend them money that they could not afford to pay back. With the exception of the 1950's to 1973, when they were controlled by a dictatorship who would not borrow money just to give it away. After all, nobody was voting for them, they didn't need to buy anyone, they just needed to run the country.

The solution is really simple. forgive the debt but don't raise the credit rating again, don't lend them money and force them to use their primary budget surplus (yes they are generating more than they are spending today without loan repayments), until they can afford to pay any loans back.

Of course that won't happen because then Germany and France would have to be scrutinised for their lending practises. Because those hundreds of billions of € given out in bailout funds to the PIIGS went mainly to paying those French and German banks back for the bonds they had bought......

This month my pay arrived with an exchange rate of €1.45 and then dropped massively to 1.37 today. Which means I lost a few hundred £ on the exchange to £ and I'm losing hundreds of £ more having to pay in € when the currency has bounced before Greece does something Stupid on Friday.....

The cycle continues. The only thing guaranteed to be missing is common sense.

[Workingman]

So, if we simple mortals can see it why can't the highly paid economists and bankers?

Is it that if they continue to deal the way they have because there is money in it for them regardless of the misery their operations impose on the hoi-polio?

I often call them spivs, because that is what they really are. They are certainly not 'investors' and they care not for the individual or societies. All these people want to do is make money from dealing in money. It is they, not the reality of how markets really work, who have brought Greece to its knees.

[Suff]

In the research I did for that long diatribe I wrote a while back about the economy and wages etc, one thing was incredibly clear.

During the previous centuries the general working public were pretty much insulated from the impact of any sudden losses such as bad debts. With 80% - 90% of the economy of the country in the hands of a very few businessmen, bankers, lords and the crown, the impact on the rest of such poor lending practises was minimal.

However when nearly 50% of the economy of the country is in the hands of the people, they share in the pain much, much, more.

The bankers have yet to work this out. After all they've had less than a century to get used to it and they are very slow to react to this kind of change. They still think they can chase imaginary 30% year on year profits and nobody but those who play with the money will get hurt.

How we stop that is an interesting question. What we are doing now is not likely to work. All it is doing is building the price of failure into the base wage packet of those likely to be responsible. You can't take the base wage away but you might be able to take the severance penalty away.

I recall when J.P. Garnier tried to get his pay upped to £3.5m per year, the shareholders rebelled and blocked it. Mainly because he had a 5*annual salary poison pill clause which meant he got 5* his annual salary as a severance penalty for him leaving for any reason other than his own free will. They would have had to pay £18.5m to get rid of him.

Today these base salaries are rapidly catching up with where J.P Garnier was then and will have similar clauses built in.

Time to take a step back and work with business whilst telling business that they cannot, any longer, ignore the pain their fiscal imprudence pushes on the population in general.

Don't hold your breath, it's a quick way to die....

[Suff]

I like this one...

In short, a succession of leaders had no real intention of Greece of fulfilling the commitments that they had agreed to. So, if Greece has actually been suffering from an honesty crisis, then we have been playing a game of lies the entire time.

That was obvious from day1. Apparently more Political Time was needed to admit it...

[Workingman]

And the other side..... Playing a similar game.

I can't wait for the 'blockbuster of the century' film release.

[Suff]

It'll be a flop, like everything else done about the Greek debt crisis.