Re: Sword of Damocles
mInvestor
2/22/2012 11:01:47 PM
I beleive Greece will eventually leave Euro, either now or later. I don't think bailout II will help Greece very much. They will request bailout third and forth. The problem will get even bigger at later time. At that time, I guess Euro will need to deal with the problems in Portugal, Spain and Italy. If Euro doesn't cut off Greece now, they will face a bigger challenge later and may eventually have to break up Euro. Sadly to say, there is no good solution on this problem.
Re: Sword of Damocles
Phoenix
2/22/2012 11:39:52 AM
I also feel it's time Greece left the euro. They could then let their own currency devalue and start their economic recovery with historically proven economic models. They will have to face problems but I think rather than having to listen to other countries and eat humble pie it is better as a nation to try to recover on their own. You cannot expect to change a whole nation's attitudes and behaviours along with their work ethics in such a short time. In fact I doubt whether it can ever be done if one is forced to give up traditions and beliefs.
At least technically, it is important that the bailout not be considered a defaul. This is to avoid triggering certain default provisions, that the Central Banks and other leaders have decided are unacceptable.
This is playing word games. "Voluntary" is the last word to describe getting only half your money back on a bond. The word that does come to mind is default.
Re: Sword of Damocles
tokyogai
2/21/2012 2:24:58 PM
I think that the Euro really only makes sense for France and Germany. Maybe most fo the others should get out.
Germany is evidently not feeling any of the Greek's pain. its latest Monthly Report is, in a word, upbeat:
"The outlook for the German economy improved perceptibly towards the end of the reporting period, though risks relating to the sovereign debt crisis remain. In the first quarter of 2012, external factors will continue to weigh on production. From the second quarter onwards, cyclical stimuli could gain the upper hand, however. The assumption underlying the Bundesbank's economic forecast in December of a fairly rapid resumption of growth looks more likely to materialise at the present juncture. Vigorous construction demand will provide the economy with a strong stimulus for the foreseeable future. This also applies to the winter months--unless weather conditions mean that production has to be interrupted for prolonged periods. In this case, there would probably be considerable catching-up effects in the spring. Private consumption is likely to continue to buoy economic activity. This is being driven by the persistent positive sentiment among consumers. They appear to see only limited income risks at present. As a result, saving is not a primary motive at the moment. Monetary policy will remain very expansionary, and ample liquidity will ensure very low interest rates."
Noreen,
The bottom line is you are right, and it points to the bigger problem here -- why is Greece even in the Euro? There was this huge rush to get countries in the Euro that have no business being there. It created artificial imbalances. The Euro treaty has budget guidelines that were never enforced even from the beginning.
The same problems will still exist long after Greece with countries like Portugal, Spain, and Italy. The concept of a common currency among separate sovereign states is a flawed concept.
There are attempting to privatize large chunks of the country. But the only thing you have to ask is, "is it good to sell low?"
Re: Sword of Damocles
driven
2/21/2012 11:04:46 AM
I don't think it's a dumb question, though I really don't have any good answer. Think of it on an individual level: If you own an estate that's been in the family for generation, but can no longer afford to operate it, you may opt to sell a portion of the property or some of the antiques in the house.
You would think a country, in a time of crisis, could do something just as difficult but practical to remain solvent.
Excuse me if this sounds naive. But why can't a bankrupt country sell some of the things it owns? Can't it privatize some of its government owned lands or sell some historical artifacts to a privately operated museum with the caveat that the items have to stay in Greece?
I know we don't want to transform the Parthenon into a retail mall, but there has to be some ways to capitalize on assets for the good of the nation.
If I were Greece, I would not want Germany standing on the sidelines, constantly judging my policies, people and work ethics (or lack thereof). And I'm German, so I know exactly how uncomfortable we can make people (and countries) feel.
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