Germany's Announcement

[Anonymous]

jsteele wrote:Countries used to default all the time and the rest of the world hardly felt a hiccup. Greece should be calling in its creditors and dictating terms. The bankers may finally have to take a financial hit. That's a tragedy for them, but I suspect the rest of us will not be too concerned.

I am not so sure about that

[Anonymous]

When it's a big country, there can be international repercussions. Think Russia and the Far East in the late 1990s, and the Long-term Capital (hedge fund) crisis. I doubt Greece rises to this level, although the ripples could go wider if Germany and the EU are affected.

[Anonymous]

Anonymous wrote:When it's a big country, there can be international repercussions. Think Russia and the Far East in the late 1990s, and the Long-term Capital (hedge fund) crisis. I doubt Greece rises to this level, although the ripples could go wider if Germany and the EU are affected.

Ripple is the right word. Think Spain and Italy.

[Anonymous]

I think that the real concern here is the inter-connected banking system and a situation that seems to lead to default. Greece in and of itself is not the real worry. IMHO, the real worry is twofold. First, will the European banks take such a hit that it will affect our banks (think Lehman bros). Second, Greece has not been resolved from lack of trying. Italy and Spain are much bigger and they have the same problem, so if Germany can't rescue Greece, what hope do they have of doing anything meaningful for the other big economies?

[Anonymous]

This could affect the US economy as well. If the weaklings are kicked out of the Eurozone, then that leaves only the strong countries. The Euro appreciates against other currencies, making US products cheaper in Europe, but also more expensive for Americans to buy European products or take vacations there (yes I realize European vacations are hardly on the top of worries).

[Anonymous]

Anonymous wrote:This could affect the US economy as well. If the weaklings are kicked out of the Eurozone, then that leaves only the strong countries. The Euro appreciates against other currencies, making US products cheaper in Europe, but also more expensive for Americans to buy European products or take vacations there (yes I realize European vacations are hardly on the top of worries).

A vacation in Greece, Italy or Spain doesn't sound too bad.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This could affect the US economy as well. If the weaklings are kicked out of the Eurozone, then that leaves only the strong countries. The Euro appreciates against other currencies, making US products cheaper in Europe, but also more expensive for Americans to buy European products or take vacations there (yes I realize European vacations are hardly on the top of worries).

A vacation in Greece, Italy or Spain doesn't sound too bad.

It's the right thing to do, we'd be doing our bit to help these countries' economies.

[Anonymous]

jsteele wrote:Countries used to default all the time and the rest of the world hardly felt a hiccup. Greece should be calling in its creditors and dictating terms. The bankers may finally have to take a financial hit. That's a tragedy for them, but I suspect the rest of us will not be too concerned.

I get you are a pro-government, anti-banker-type, Mr. Steele (and I'm with you on half of that lol), but it is not that easy. As I understand it, Greece is not self-sufficient in energy (meaning it needs hard currency to pay for energy imports) and requires ongoing financing to fund its current government operations, leaving aside its debt service costs. If they screw their current creditors, who will be willing to loan them any additional money, which they have to have to keep the lights on and the government functioning? If Greece was actually in a position to do what you recommend, the problem would be much less serious than it actually is.

[jsteele]

Anonymous wrote:

jsteele wrote:Countries used to default all the time and the rest of the world hardly felt a hiccup. Greece should be calling in its creditors and dictating terms. The bankers may finally have to take a financial hit. That's a tragedy for them, but I suspect the rest of us will not be too concerned.

I get you are a pro-government, anti-banker-type, Mr. Steele (and I'm with you on half of that lol), but it is not that easy. As I understand it, Greece is not self-sufficient in energy (meaning it needs hard currency to pay for energy imports) and requires ongoing financing to fund its current government operations, leaving aside its debt service costs. If they screw their current creditors, who will be willing to loan them any additional money, which they have to have to keep the lights on and the government functioning? If Greece was actually in a position to do what you recommend, the problem would be much less serious than it actually is.

Read about what happened in Argentina:

http://en.wikipedia.org/wiki/Argentine_debt_restructuring

Basically, once the bankers understand that their choices are something like thirty cents on a dollar or zero cents on a dollar, they start finding thirty cents pretty appealing. Argentina went through some tough times, but not near as bad as people were predicting.

[Anonymous]

jsteele wrote:

Anonymous wrote:

jsteele wrote:Countries used to default all the time and the rest of the world hardly felt a hiccup. Greece should be calling in its creditors and dictating terms. The bankers may finally have to take a financial hit. That's a tragedy for them, but I suspect the rest of us will not be too concerned.

I get you are a pro-government, anti-banker-type, Mr. Steele (and I'm with you on half of that lol), but it is not that easy. As I understand it, Greece is not self-sufficient in energy (meaning it needs hard currency to pay for energy imports) and requires ongoing financing to fund its current government operations, leaving aside its debt service costs. If they screw their current creditors, who will be willing to loan them any additional money, which they have to have to keep the lights on and the government functioning? If Greece was actually in a position to do what you recommend, the problem would be much less serious than it actually is.

Read about what happened in Argentina:

http://en.wikipedia.org/wiki/Argentine_debt_restructuring

Basically, once the bankers understand that their choices are something like thirty cents on a dollar or zero cents on a dollar, they start finding thirty cents pretty appealing. Argentina went through some tough times, but not near as bad as people were predicting.

But Argentina was able to devalue its currently. Greece is not, absent leaving the Euro, which is a ginormous complicating factor, Mr. Steele.