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  1. #11
    FigerPuppet
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    Oh please. The EU isn't forcing anything on Greece. They can leave the Euro whenever they feel like it - they can even leave the EU, if they so desire. Greece has been living beyond its means for a long time now; this as a result of countless loop holes in the Greek tax laws (for example, it is customary to leave part of the 2nd. floor under construction as this will exempt the owner from paying taxes on the house), an unwillingness on behalf on the cowardly Greek politicians to do anything about it, and corruption (bribery of public officials) in Greek society being both widespread and accepted. What is happening now is the culmination of decades of mismanagement for which they now have to pay the price. It's as simple as that.

    Greece has to worry about it's sovereign debt. One way to get rid of that is to declare bankruptcy/default. This would help but has a significant downside.

    Greece doesn't have a primary surplus (a surplus before paying off sovereign debt). This means that even if the debt were to drop to zero, Greece would still be making less money than it spends. Normally you would plug this hole with borrowed money but no one borrows money to someone that just went bankrupt.

    This means that austerity will happen. Maybe not officially, but as the fiscal year drags on, eventually the coffers will be empty and people will stop getting their money.

    The problem with returning to the drachma is twofold. A weak currency can be useful if you happen to be China and you a) export massive amounts of goods, b) have significant amounts of local raw materials, c) a huge domestic market and d) have long term trade agreements with regard to the import of raw materials thus ensuring the devaluation of your currency doesn't hurt you too badly in that respect.

    Yes, people like olive growers would make more money because their goods now cost less and are more competitive on the world market and tourism will likely grow (by how much depends on how badly the Greek brand has bean tarnished) but any industry that relies on imports of parts or raw materials will suffer. If Greece can't produce enough food domestically, it has to import and this means prices going up. Starting a new company will get a lot harder since borrowing money will become next to impossible. And finally, any person that has debt at a foreign bank or savings in a domestic one will be hit hard. Saving erased, debt ballooned. Anyone with any amount of euros in Greek banks would be smart to get the money out and do it now. This further compounds the problem.
    Last words: I am no economist, but you have to be very sceptical of the abilities of our elected officials if you think the majority of them are going to support dumping €100bn into Greece on blind faith. The media is sensationalist; of course they are not going to report on the thousands of economists who actually support the austerity measures when they are simply going to repeat what the "boring politicians" are already saying. It's much more interesting to cherry-pick a sceptic here and there. This matter is so politicized that every thing the media says has to be taken with a grain of salt.

  2. #12
    Senior Member Eckhart's Avatar
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    Well, I remember they wanted to make a democratic referendum about whether they want to accept those plans or not, and there was a huge outrage in the EU and they applied lots of pressure to stop this referendum. I am not sure if the politicians which are in power in Greece right now represent the will of the population (do the people really want to stay in the Euro?).

    edit: Also I think no one is denying that there went a lot of things wrong in Greece over years and still do.

  3. #13
    FigerPuppet
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    Quote Originally Posted by Eckhart View Post
    Well, I remember they wanted to make a democratic referendum about whether they want to accept those plans or not, and there was a huge outrage in the EU and they applied lots of pressure to stop this referendum. I am not sure if the politicians which are in power in Greece right now represent the will of the population (do the people really want to stay in the Euro?).
    They still had they choice to go ahead with the referendum. The rest of the Euro-group members simply demanded that if they did go ahead with it, a NO-vote would also be a vote to exit the currency. It's understandable that they were outraged. The Greek PM turned 180 degrees on the spot, after an important and delicate deal had been negotiated through. A NO-result could ruin all of their efforts and hit Europe hard; Greece even harder. Had they not accepted those plans they might as well have defaulted, because nobody would have wanted to lend Greece any money then.

    I actually read an article about the Greek desire to stay in the Euro yesterday. Approximately 75% want to keep the the Euro, while only 40% believe that they are going to be able to stay a member. I don't know about the public opinion of the Greek politicians.

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