Another month another cliffhanger

[cromwell]

Is this a workable idea? From the Mail website:-

"The former head of the German equivalent of the CBI, Hans-Olaf Henkel, yesterday said that Greece should be forgiven its debts, which he believes it could never pay, on condition that it leaves the euro.

He told the BBC: ‘There is only one way out – let the Greeks go. We should be willing to forgive the debt on one condition – that the Greeks leave the currency union.

‘For the German finance minister it makes no difference because every economist in Europe knows the money is gone."


Or, will political pride scupper this proposal? Would the political humiliation of the EU elite stop it?

[Workingman]

A politician with a half-decent idea; that must be a first.

It is similar to what some of us have been saying for months. The loan-shark scam where Greece borrowed money to pay off the interest on the money it had already borrowed. and for the lenders to hope the Greek economy could grow to the point where it could pay off the interest, and then the debt, was never going to work.

But I guess that you might be right, political pride will not allow it to happen.

[cromwell]

It just seems like a practical idea.

[Suff]

The latest is that they will bundle all the IMF repayments into one payment at the end of the Month.

This gives them time for a referendum or an election because the terms demanded are worse than those they were elected to get rid of....

[Workingman]

You have to laugh or you would cry.

More "money" was lost on stock markets in one day than all the Greek debts and borrowings put together over "fears" that Greece might default - Athens, down, Cac 40, down, Dax, down, Dow Jones, down, FTSE, down.

The Schadenfreude is overwhelming.

[Suff]

True but the EU governments don't care that much about the markets.

World wide GDP is about $60tn annually. Volatile trades world wide are around $400tn. So they could care less what Greece does.

But you are right. This could be resolved and then fixed permanently by treaty changes without having to punish the hell out of the Greeks or anyone else. They won't do that though because firstly it would be too much work for them and secondly people might choose to exit the Euro rather than submit to a single political state....

It is enough to bring on tears, either of rage or of misery...

[Workingman]

World wide GDP is about $60tn annually. Volatile trades world wide are around $400tn. So they could care less what Greece does.

Precisely. The Greek debt and borrowing are not even loose change by comparison, more like pocket lint.

Yet we get media hypers of the likes of Robert Peston and Stephanie Flanders given free rein to scare the screaming bejeezus out of us mere mortals.

[Suff]

True. But, in a way, Greece is important in a purely EU centric world. Like a pebble Greece could cause the financial landslide they are all trying to avoid. That would also have a world impact.

The reality of the matter is that in World terms the whole PIIGS issue is slightly more than pocket change. However the impact of not shelling out that pocket change to reset the markets and get things going again could be massive.

So whilst the doomsayers are fairly wrong in what will happen in the next 6 months to a year, with poor management world wide the 5 - 10 year outlook could be very grim indeed.

It's becoming fairly clear now that the elephant in the room about Greek debt is debt forgiveness. It is ultra clear that Syriza will do almost everything that the Troika wants, but only if they write of 75% of the remaining debt.

The EU is not going to write off the debt. So they are going to drive Greece right off the cliff. Because nobody is talking about the key to this issue. It's not financial, it's political. Syriza can't fold and stay in office. They can negotiate and they can give up most of what they had in their manifesto.

IF

They get debt write off.

Listening to the noise coming from the vulnerable governments in Portugal, Spain and Ireland, plus the dangerous noises in the German coalition and we have a train wreck in the making.

Some time in the future someone will probably be writing about how the Troika simply didn't understand what Greece needed. They were too busy lecturing to listen.

We shall see....

[EDIT]

I hadn't had a chance to read the news today but it seems I'm heading in the right direction.

But I don't see the EU playing ball...

[Workingman]

No, it will not cause a financial landslide on a global scale.

The total Greek debt is less than the value(?) of some global companies. If Greece folds, goes under, defaults or collapses it will matter not one iota to the global economies or the stock markets.

The spivs and speculators (investors) will simply buy back at the lowest price and force the price up - it is what their algorithms tell them to do.

[Suff]

If the landslide effect of Greece is to take Italy down, who has the 4th largest economy in the EU and the 9th largest economy in the world, then it will cause ramifications on a global scale.

If Italy goes then Spain, Portugal and Ireland can't survive. If they all go, then France is in danger and Germany is in trouble because France is almost borrowed to the hilt and has an economy which is struggling. Germany will be in trouble because it can't afford to fix the mess.

If all of the above happens then Asia is in trouble because they have invested very heavily (trillions), into the € and the € will vanish.

So the doomsayers are right in one way but wrong in another. They are wrong about the timescale. If Greece goes, my estimate is that the Euro may drag on for another decade. But, just like we saw with the £ and the ERM, when traders smell blood in the water they keep on making a killing until there is nothing else to take.

So Greece is right to warn. But just like Global Warming, the roof won't fall in over night. But it will eventually.