Eurozone will collapse...

[Ignitionnet]

Former MD of the IMF Dominique Strauss-Kahn offers his thoughts - largely negative about the current IMF policies:

http://fr.slideshare.net/DominiqueSt...7-tweet-greece

This, if true, is absolute dynamite:

More is coming in about the telephone conversation the Greek prime minister Alexis Tsipras had this afternoon with the German chancellor Angela Merkel and French president Francois Hollande.

Helena Smith our correspondent writes:

Courtesy of Mega News we are now learning that Tsipras’ chat with both leaders was far from cordial. The Greek prime minister, responding to Merkel’s protestations that the referendum would ultimately boil down to a choice “between the euro and drachma” is reported to have said:

“No it isn’t.

This is the birthplace of democracy. We are a sovereign country and will not be told what question to pose in this referendum. The referendum wiill take place regardless of whatever the decision the Eurogroup takes.”

EDIT: Fundamentally Merkel is stuffed here. The arrogance of the EU and the Euro-project alongside the obsession with ever-closer union is put into stark focus when it's pointed out, as noted by the Greek Finance Minister, that the 'procedure' for a country to leave the Euro simply doesn't exist.

Originally Posted by Ignitionnet

So for those who didn't know Syriza have somewhat abrogated responsibility, and have called for that thing that is utterly anathema to the EU - a referendum.

The referendum is just them, as you say, refusing to take responsibility. They said things would change and they would get a better deal, they went to the EU who effectively said 'No'. They don't want to either sign up to a lesser deal than promised or take reasonability for the consequences of default.

The EU may be screwing over Greece but no one is being honest with them that default and losing the Euro isn't going to be easy either. No one has told them them that whichever path they take they cannot afford the society they want or at least not with a lot of tax reform. The days of low taxation and massive pensions are over.

[Ignitionnet]

On the flip side try telling the Greeks that more of the same will somehow work in the context of this, Damien.



Germany want to ram austerity down Greece's throat as they, voluntarily, did it to themselves and it kinda worked. Of course it worked because the Euro kept their exports relatively cheap and provided a ready made market in the rest of the Eurozone but let's not go into minor issues.

[nomadking]

Originally Posted by Ignitionnet

On the flip side try telling the Greeks that more of the same will somehow work in the context of this, Damien.



Germany want to ram austerity down Greece's throat as they, voluntarily, did it to themselves and it kinda worked. Of course it worked because the Euro kept their exports relatively cheap and provided a ready made market in the rest of the Eurozone but let's not go into minor issues.

Greeks overspent on employing people in non-jobs, on increasing salaries, on increasing pensions and entitlements. They didn't collect taxes, they made business difficult and expensive. How on earth was anything going to go right? That is ongoing spending. That is what has to be cut back. It would be easy if they had spent it on the household equivalent of several flash holidays a year. In that situation you can cut back on the holidays without having to cut back on other household spending. Is anybody going to invest there, whilst there is a government that might well take the business away from you?

[Ignitionnet]

This says what I would say better than I could.



Greece have made pretty much unprecendented cutbacks. The Troika demand more of the same even though, per my earlier image, it isn't working, and the former MD of the IMF admits it isn't working.

Greece are not blameless, but are being hung out to dry to support the 'EU' project.

[nomadking]

Any supposed improvements will be because of austerity imposed upon them. Without that constraint they will let loose again with the excessive spending.

If the GDP has plummeted, how can any alleged "cyclically adjusted surplus" exist?

Then there are the cuts that have been reversed, such as the reopening after two years of the state broadcasting company ERT, which started programmes again this year.
The problem therefore is not so much that Greece is incapable of reform or does not know what needs doing, but that it has wasted five years of the bailout without making serious attempts to fix the structural problems that beset the economy - and in many cases it is actually going backwards.
If it had started five years ago, it might have been seeing the results by now as countries like Ireland and Spain have done, but one of the reasons that the Greek bailout has reached another crisis point is that it has hardly started.

[Ignitionnet]

I recommend a course in economics. It will fill you in on why, if GDP has plummeted, a cyclically adjusted surplus can exist.

That you ask the question indicates you don't know what a cyclically adjusted surplus is.

Originally Posted by Ignitionnet

I recommend a course in economics. It will fill you in on why, if GDP has plummeted, a cyclically adjusted surplus can exist.

That you ask the question indicates you don't know what a cyclically adjusted surplus is.

I didn't know either, so I looked it up:

The excess of a government's total income over expenditure assuming normal levels of economic activity. This assumes that tax and consumer spending are constant.

Read more: http://www.businessdictionary.com/de...#ixzz3eKy9CtMm

And there's the kicker!

This assumes tax and consumers spending are constant - the taxes haven't been constant for decades.....

Krugman's article (where I found your IMF chart), states that Greece ran a small budget surplus last year, if you didn't count interest (I am assuming on Government debt) - that's like saying my bank account is in credit, if you don't count my mortgage payments or HP loan repayments.

He is being 'economical with the actualité'*......


*see what I did there? ;-)

[Osem]

... and yet all of Greece's well known and evidently endemic economic problems still didn't prevent them being welcomed into the club they're now destabilising. It's all a bit FIFA...

ECB pulled the plug from the Greek banks! just now

[Osem]

The European Central Bank is expected to end emergency lending to Greece's banks on Sunday, the BBC understands.

The country's banks depend on the ECB's Emergency Liquidity Assistance (ELA). Its governing council is meeting later.

Greece will probably have to "announce a bank holiday on Monday, pending the introduction of capital controls", a source told the BBC's Robert Peston.

The bailout for heavily indebted Greece expires on Tuesday and talks have broken down.

http://www.bbc.co.uk/news/world-europe-33303105

---------- Post added at 10:07 ---------- Previous post was at 09:59 ----------

As this situation worsens, I wonder whether there's going to be any resentment or action taken against those who're insulated against the problem e.g. the ex-pats who can rely upon external sources of income such as overseas investments and pensions. Once the ATM's start working again, there'll be those who'll have money to withdraw and those who don't. Many of the former won't even be Greek and I don't suppose Germans will be too popular.

[nomadking]

The Greek banks didn't really need the liquidity assistance. This has not been a case of people withdrawing large sums of their savings. It is withdrawing money they are going to need to spend on everyday things in the near future. They are withdrawing it just a bit sooner than they would otherwise do, ie Friday rather than risk waiting until Monday.

Originally Posted by Carlos Carboni

ECB pulled the plug from the Greek banks! just now

No, they will not pull the plug. Robert Preston was wrong, his sources were rubish and BBC caused panic for no reason

But legally they cannot lend further funds to an insolvent bank.

the ECB cannot break its own rules by funding a banking system where the country is heading for a default.