Greece

[Huguenot]

It it a sad sad disaster, that the very same banks who tried to do a number on British people with Northern Rock have been allowed to do a number on Greece.

They defaulted because the money markets did a dirty on them, and inflated their cost of borrowing to the point they couldn't pay.

It's called loan sharking. The banks destroy people. The only thing they rely on is the fact that they hope people hate the Greeks.

I don't. I know a scum bag, and it ain't the Greeks.

[Huguenot]

I notice the first to downgrade Greece were Goldman Sachs. Leopards, spots. What's the chance they deliberately attacked Greece after investing client money because they'd make a ton?

[????]

Isn't the Euro going to sort this out?

Rather simplistic actually Hugenot - the Greeks borrowed rather a lot of money for 'stuff' like thier pensions and Olympics and a brand new sapnking metro that they couldn't afford to pay back and no-one will lend them money now except at a huge premium........not even the Germans. Some of us told you this was going to happen ages ago and you wouldn't believe us.....Portugal next

Rotten bankers eh

[????]

Clever chap like you should read some economics...

[Huguenot]

I don't dispute the challenges, I dispute your assertion that this is the end of the road for the Euro. Greece represents 2% of the GDP of the Eurozone, not 30%!

I'm confused by your gloating.

I'm also confused by your confidence that this somehow makes England clever - the pound is in a far more shocking state that the Euro, and Britain has suffered more from recession that any other G8 nation.

The UK economy contracted for six consecutive quarters (that's quarter on quarter, not from the start point), the worst anyone else managed was three.

There is absolutely no doubt that Britain would have been far better off in the Euro than out over the last four years.

If Portugal gets in trouble that will be because the bankers had a go at that too.

It should be illegal to bet against your investments.

[Huguenot]

On a similar note I see that Lloyds has gone back into profit, netting the taxpayer a cool profit on their investment.

It has proven its long term strength. As will the Euro, as will Greece and Portugal.

Yet the bankers were doing a run on Lloyds because they were looking for short term gains and didn't care if the bank was essentially sound and that slaughtering it would destroy the lives of millions of people.

They did it to the financial system, now they're doing it to nation states.

Those loan repayments that have skyrocketed are the Greek debt - they're what the new 'loans' are paying off. The money is going straight from European taxpayers to bankers simply because the bankers want more.

[????]

Where's my gloat? Only in your imagination - it's a blow to global economic stability and prosperity. RE the pound read the other thread and see what I said about the pound...it's only in your imagination that I haven't been going on about the shocking state of the UK's public finances and economy for the past two years but your attitude seems to be Quids questions the vadility of the Euro in its current format ergo = little englander, btitain is great, europhobe etc...such is the way of the certain - dogma, unqustioning belief, smeer etc etc for those that dare to question something that is conceptually a good idea but practically looks increasingly flawed. Dogma over reality and putting words that are simply not there into someone elses mouth once again Hugenot, you have so much previous on this it's unreal. It's amusing when ones mood is right but tiresome continually and detracts from many an otherwise intersting debate, Today I'm amused so will get back on WHY IT'S NOT ALL THE BANKERS FAULT later.

[Jeremy]

Greece has been living beyond its means for quite a while. Yes you can quite reasonably argue that this has revealed a big flaw in the market, making it impossible for them to dig themselves out under their own steam. But the Greek government have to take responsibility for the budget deficit in the first place.

Huguenot Wrote:

-------------------------------------------------------

> It should be illegal to bet against your investments.

I assume you're talking about the GS scandal, right? It's not a case of betting against your investments (actually it is entirely appropriate to hold both long and short positions). The problem is when you're betting against your client's investments, or you mis-sell a very risky asset. But I actually think this is mainly separate from the Greece problem.

[Brendan]

How dare you cast such aspersions upon our lords and masters Huguenot!

And then further challenge the goodly faith of their proponents.

Blasphemy!

Loan-sharking is only bad if it is done by ne?er-do-wells not if it is done by our respectable magnanimous ruling financial elite. Then it is business and our ultimate salvation. Hallelujah!

[Loz]

Greece has been living beyond its means for years now and, looking at the protests against the austerity measures, has little to no clue about the reality of the situation. It's interesting that Germany is holding back on bailing Greece out, as the current deal would mean that Greek pensions would be higher than German pensions, which is unsurprisingly a little unpopular in Germany. But the Greeks won't accept cuts.

Bankers have many faults and create lots of problems, but the culprit here is Greece itself.

[????]

Loan sharking Brendan? - Greece got cheap finance as part of joining the euro since when it's gone mad on its new credit card and way overspent now no-one will lend it anything except at a very high rate (reflecting risk) and that increasingly appears to be including Germany.

Greece and possibly others have overindulged themselves on cheap finance as part of the benefit of joining the German underwritten Euro. Having over indulged they subsequently seem unable to make the neccessary very painful adjustments to stay in the very thing that gave them the cheap money in r=the first place. You could argue that it is the Euro itself that has got them in this mess as they weren't financially mature enough to deal with it.

How this is all the bankers fault is a bit beyond me to be honest

[????]

As well as economics people should read David Copperfield

[Brendan]

Financial arrangements where it is pretty much accepted that you are setting the recipient up to fail and consequently default into paying you off perpetually = Loan-sharking.

I?m not denying that they overspent, so has Britain. But this, ?serves then right?, ?they?ll get what they deserve? attitude is fucking distasteful.

[????]

Again assumptions on attitudes and beliefs based on god knows what....I do get fed up of it on here it's bleeding constant. You can't seem to have objective conversations on this forum without posters having a whole load of pre-concieved views/ baggage about individuals attitudes and politics FFS. Which are frequently wrong and prejudiced.,,,I get fucking fed up with it.

The fact is that Greece has vastly overspent on cheap credit based on false accounting to get into the Euro in the first place.

Is that good for the world economy. NO

Is that good for the ? No

Is that good for the Euro NO

Is that good for the people of Greece NO

Is it a terrible horrible mess and shame YES

Is it much to do with Bankers NO

For pointing out some of these truths about the reality of running a unified currency from a very different bunch of countries and political and economic countries and the need for governemnts spending and using credit sensibly, I get treated like I'm some evil hedgefunding billionairre laughing gleefully as people's lives are wrecked.

FFS

[SeanMacGabhann]

I see people disagreeing with you quids - not sure you are being "treated" in any way? People saying you have a tone of gloating or that interpretation of your posts is "distasteful" isn't as bad as you are making out surely?

[Brendan]

Aaawww, precious.

To be fair I?m a bit narky this morning as I?m fucking hungover.

[silverfox]

The issue is really quite simple whatever the causes: bail out Greece to prevent contamination spreading (Portugal next?)or don't bail her out and let the country go bust.

Neither choice is particularly desirable and Angela Merkel is in a difficult position because of German public opinion against the rescue and the forthcoming regional election in North Rhine-Westphalia on May 9. Moreover, the German Government needs to pass special legislation to obtain authority for its ?8.4 billion share of the eurozone package which will be opposed.

At some stage the bail outs have to stop - but the potential consequences are quite frightening.

[Brendan]

Why not bail out Greece and in return all Germans get 2 nights free on their next holiday in Greece and a complementary plate of souvlaki.

May be an election winner.

[mockney piers]

Mind you Russia seemed to go from Bankruptcy to Energy Superpower in a short time, perhaps its not a desperately terrible thing to happen; look at Southampton FC!

Not that Greece has much energy to sell....lots of very valuable art and historic artefacts mind...

[Jeremy]

To be fair to Huguenot and Brendan, there are 2 sides to the story. Investor activity must have contributed to Greece's increased cost of borrowing - the inevitable snapping up of CDS to cover risk, and probably some hedge funds holding naked CDS positions (i.e. betting that Greece will default).

But it all started because the government over-borrowed. That's not saying that they deserved this, it's just stating a fact.

[smallblue]

It would be remiss of the rating agencies not to have acted i.e downgraded, if their models suggested, at best, a 30% recovery on Greek debt.

Ultimately, it's not the banks determining the rate of interest on Greek govvy debt, but the auction participants. Greece recently launched debt issuances in the states and the Europe, so it's fair to say the yield on 10-year debt is representative of wide investor opinion, rather than maverick speculators or greedy banks. Not many people wanted to take on the debt, so the yield rose till people bit.

It's worth remembering Greece are running a budget deficit of over 12%, with short term debt needing re-financing far more often than other countries. It appears to have no credible means of bringing down the deficit, let alone eating into the massive stack of debt in its name.

[HAL9000]

In case anyone here is unaware of the Greek currency swap scandal engineered by Goldman Sachs: this Google results page identifies many relevant news articles: http://www.google.co.uk/search?hl=en&q=greece+goldman&btnG=Google+Search&meta=

[Magpie]

Actually the last couple of years demonstrate what a excellent decision it was for the UK not to join the Euro. The UK, like Ireland, Greece, Spain, Italy and to a lesser extent Portugal borrowed execessively private and publicly to generate credit fueled booms. Then comes the bust. The UK with an independent currency and the ability to set its own interest rates is cushioned by a collapsing currency to help rebalance the economy towards exporting, and lower interest rates to reduce lending costs and keep the economy alive. The PIGS are stuck within a strong euro and a too high interest rate backed by solid German financials and its exporting machine. The only way out is stringent spending cuts - the Irish have managed to get this through, the Greeks refuse and take to the streets - hence the banks get nervous they won't get their money back. The run on Greece is the same as the run on the banks a few years ago - confidence needs to be restored to the system - it could be achieved by the Germans intervening to support Greece, but understandably they are not that keen as its not obvious they will ever get their money back. This was the same mistake that stopped the US government stepping in to save Lehmans.

Lets be clear here - the run on the Greeks is not caused by the banks per se, it is caused by the Greeks over-spending and running huge budget deficits and current account deficits over many years - something the UK is just as guilty of (but from a stronger starting position) - but we have the freedom to devalue and set our own interest rates, the Greeks do not.

[SeanMacGabhann]

Wouldn't an alternative course for the UK be to have joined the Euro and not embark on a credit boom - I dunno, maybe invest in manufacturing or something?

[Magpie]

It would have been a better idea not to have a credit boom - whether we joined the Euro is irrelevent. Joining the Euro wouldn't have made any difference to whether or not a credit boom occured - interest rates in the Eurozone have historically been below those in the UK - hence the trouble the PIGS are in.