Greek Default 2015 Poll

[greentea]

lots of tricky politics and history wrapped up in this, makes it impossible to predict what's to come just based on the economic implications of possible outcomes

http://www.businesstimes.com.sg/governme...xtor=AL-18

JUN 16, 2015 11:10 PM
[ATHENS] Prime Minister Alexis Tsipras lashed out at Greece's creditors on Tuesday, accusing them of trying to "humiliate" Greeks, as he defied a drumbeat of warnings that Europe is preparing for his country to leave the euro.

The unrepentant address to lawmakers after the collapse of talks with European and IMF lenders at the weekend was the clearest sign yet that the leftist leader has no intention of making a last-minute U-turn and accepting austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks.

Financial markets, for months indifferent to wrangling over releasing billions of euros of aid for Greece, reacted with mounting alarm.

European stock markets hit their lowest level since February and the risk premium on bonds of other vulnerable euro zone states leapt in one of the sharpest episodes of contagion since the height of Europe's debt crisis in 2012.

[lilvestor]

Yea Greece is actually more trade and tourism related. Guess what happens to these 2 when the economy goes into chaos

That said I've never seen or read a sovereign country "die" due to debt, not even Germany. Iceland came close.

A default doesn't necessarily mean chaos, Iceland did fine after they defaulted, tourist numbers nearly doubled after the crisis.

Contrary to what most people think, Greece actually has a very competitive services sector, the trade surplus on services exports account for over 10% of Greece's GDP, thats massive by any measure.

Greece should have defaulted 4 years ago, like Iceland, they would be doing fine now.

Oh it was chaos alright, for a few yrs after they defaulted.
Iceland underwent a severe economic depression between 2008-2010. 3 yrs of suffering, during which market cap of the Icelandic stock exchange fell by >90%. (!!!)
GDP dropped by 10%
Of course now they're on the mend and doing well.
that's the effect of default, u start afresh. But you've to go through some years of hell first.
Greece would go through arguably even darker days, and for a longer period too, because
1) Iceland wasn't part of and didn't get kicked out of Eurozone. Greece will be kicked out and the other finance ministers would almost be happy to do so!
2) Greece has to revert to the drachma. Icelandic kroon dropped severely too, but its different from having to abandon another currency and start printing yours again
3) Iceland had loans from the IMF after their default, to help them stabilise and support the value of the krono.
Greece.... nobody's going to support any drachma.

Sure, they'll be ok after several years.
But before that......
and the Greeks know it too. That's why they simply do not want to leave or get kicked out.
They just want their cake and eat it too. Oh, and they also want the German's cake and eat that too.

Only 3 years of suffering and a 10% drop in GDP? How is that even comparable to Greece's 25% cut in GDP and 7 years of suffering under the EMU? I think most Greeks would gladly take the former if they knew staying with the euro was going to do this to them, its obviously too late to regret it now.

7 painful years, all for naught.

Greece is currently experiencing a massive brain drain, the best and brightest are abandoning the country (mostly for Germany) because they see no future in the country, the same thing is also happening to Spain. This is what years of austerity has inflicted on the peripheral economies.

[specuvestor]

I have posted various times with disdain that IMF is a one trick pony with only Austerity in its belt. Frankly i really feel for the Greeks

But chaos for Iceland happened. The PM famously said that they should go back to fishing. And it's not going to be a consolation that chaos in Greece will be greater

[lilvestor]

^^agree with GFG observation of Iceland case study and the difference in currency regime. In fact Iceland now is still facing strikes from disgruntled workers

A Grexit is likely to cause euro to spike as Grexit is seen as an improvement of euro land's budgetary and finance. A big spike in Euro will cause euro land to go back into recession as export and tourism will be hit. Against conventional wisdom,i do think the German will want to keep Greece in euro land so as to weaken the euro dollars for the benefit of German export and employment. A weak euro is a "bigger plus" for Germany than any other European countries. A big spike in Euro will also put pressure on the stock market.

Firstly greece is too small to have a budgetary impact on the Eurozone with a size of us$12tr economy. The main impact of Greece is policy precedents. How they handle greece will be the blueprint of how they handle breakaways. If they dont do it properly they only have to look at the old Soviet Union.

German people generally are not in favor of subsidising nations that they believe rightly or wrongly as not helping themselves, all the more when Greece entered Eurozone on a fraud. Their hawkish central bank culture is what kept the deutsche mark and subsequently euro strong. They have a strong disciplined culture of innovation and progress that is not reliant on currencies. Politically they are not too keen to keep Greece in Eurozone but the german leaders including Merkel knows the bigger implication.

I think no country can claim to not rely on currencies, not even USA, which is hardly an export based economy like Germany.

The only way southern European nations could have competed with highly productive Germans was with a cheaper currency, the euro destroyed such a possibility, so I'd argue that Germany has been the biggest beneficiary of the EMU because it greatly expanded the German export market and it took away their European competitors' currency edge, a weakened currency (compared to the Mark) also gave them an advantage in non-EU markets.

[lilvestor]

I have posted various times with disdain that IMF is a one trick pony with only Austerity in its belt. Frankly i really feel for the Greeks

But chaos for Iceland happened. The PM famously said that they should go back to fishing. And it's not going to be a consolation that chaos in Greece will be greater

Iceland was nearly 100% reliant on banking before the crisis, they had no real industry. Greece is different, take a look at the link that I posted (a few posts up), there is great evidence that Greece was competitive before they joined the EMU, growth in total production was very high.

[lilvestor]

Before I log off I want to say that I don't pity Greece, they took advantage of cheap money and they enjoyed themselves, so the current crisis is comeuppance for them, what I'd like to point out is that their creditors, who were all so eager to lend money to them for next to nothing shouldn't think that they deserve to walk away unscathed. A default, in my view, would be the perfect outcome for all parties.

[GFG]

Yea Greece is actually more trade and tourism related. Guess what happens to these 2 when the economy goes into chaos

That said I've never seen or read a sovereign country "die" due to debt, not even Germany. Iceland came close.

A default doesn't necessarily mean chaos, Iceland did fine after they defaulted, tourist numbers nearly doubled after the crisis.

Contrary to what most people think, Greece actually has a very competitive services sector, the trade surplus on services exports account for over 10% of Greece's GDP, thats massive by any measure.

Greece should have defaulted 4 years ago, like Iceland, they would be doing fine now.

Oh it was chaos alright, for a few yrs after they defaulted.
Iceland underwent a severe economic depression between 2008-2010. 3 yrs of suffering, during which market cap of the Icelandic stock exchange fell by >90%. (!!!)
GDP dropped by 10%
Of course now they're on the mend and doing well.
that's the effect of default, u start afresh. But you've to go through some years of hell first.
Greece would go through arguably even darker days, and for a longer period too, because
1) Iceland wasn't part of and didn't get kicked out of Eurozone. Greece will be kicked out and the other finance ministers would almost be happy to do so!
2) Greece has to revert to the drachma. Icelandic kroon dropped severely too, but its different from having to abandon another currency and start printing yours again
3) Iceland had loans from the IMF after their default, to help them stabilise and support the value of the krono.
Greece.... nobody's going to support any drachma.

Sure, they'll be ok after several years.
But before that......
and the Greeks know it too. That's why they simply do not want to leave or get kicked out.
They just want their cake and eat it too. Oh, and they also want the German's cake and eat that too.

Only 3 years of suffering and a 10% drop in GDP? How is that even comparable to Greece's 25% cut in GDP and 7 years of suffering under the EMU? I think most Greeks would gladly take the former if they knew staying with the euro was going to do this to them, its obviously too late to regret it now.

7 painful years, all for naught.

Greece is currently experiencing a massive brain drain, the best and brightest are abandoning the country (mostly for Germany) because they see no future in the country, the same thing is also happening to Spain. This is what years of austerity has inflicted on the peripheral economies.

Oh for sure, nobody's doubting that the Greeks have suffered. The point I m making, which is prob an obvious point, is that after default, this 25% drop in gdp would look like its nothing. Things will get ugly, and for a number of years.
http://www.tradingeconomics.com/iceland/stock-market
This shows a chart of Iceland stock index. Crisis in 2008, if u look at the big picture, they still aren't even close to really recovering.
But of course, if u zoom into 2012-present, it looks much better.
Greece defaultingwill have to go through that same periodic wilderness, followed by a long slow recovery

On another note, austerity alone didn't CAUSE the Greeks to suffer.
IMO, there needs to be austerity AND business friendly policies. Sure, austerity was imposed. But the 2nd part of the equation was missing. The Greeks lack strong leadership who would do what's necessary. Things like labour law reforms, privatization of government controlled companies and lowering (with the aim of eventually scraping) generous pensions, retirement benefits etc

Or to view it from another angle: what's Singapore stance on all of these compared to Greece? It's totally opposite. And for good reasons too.

Back to the topic of this thread... My opinion is still that they won't default by the end of June though, and my investments are set up as such. If one genuinely has a strong conviction that Greece will default, then it's better to exit everything n hold cash cos it's hard to see how the subsequent contagion won't affect every market.

[CityFarmer]

I wish the Greek PM know what he is doing, for the benefit of his people...

Greek PM tears into lenders, euro zone prepares for 'Grexit'

ATHENS/BERLIN/VIENNA/VILNIUS (June 16): Prime Minister Alexis Tsipras lashed out at Greece's creditors on Tuesday, accusing them of trying to "humiliate" Greeks, as he defied a drumbeat of warnings that Europe is preparing for his country to leave the euro.

The unrepentant address to lawmakers after the collapse of talks with European and IMF lenders at the weekend was the clearest sign yet that the leftist leader has no intention of making a last-minute U-turn and accepting austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks.
...
http://www.theedgemarkets.com/sg/node/209502

[sgd]

I wish the Greek PM know what he is doing, for the benefit of his people...

Greek PM tears into lenders, euro zone prepares for 'Grexit'

ATHENS/BERLIN/VIENNA/VILNIUS (June 16): Prime Minister Alexis Tsipras lashed out at Greece's creditors on Tuesday, accusing them of trying to "humiliate" Greeks, as he defied a drumbeat of warnings that Europe is preparing for his country to leave the euro.

The unrepentant address to lawmakers after the collapse of talks with European and IMF lenders at the weekend was the clearest sign yet that the leftist leader has no intention of making a last-minute U-turn and accepting austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks.
...
http://www.theedgemarkets.com/sg/node/209502

His party came to power because people who were fedup voted him in if backtrack now and bow to pressure he will become trapped greeks will not trust them anymore - political suicide.

stay also mati don't stay also no easy way out but at least become a master of your own destiny poor for a while but free.

You see in singapore few years back what was the reaction when people who borrowed from loansharks and later cannot afford to repay?

1) Run to police
2) if that doesn't work skip town.

[BlueKelah]

YES 13
NO 9

As the situation evolves, so far more members of VB forum are thinking that a default will happen this time round.

Poll will continue till 29 Jun.