Greece's referendum

[Robert]

The question is: will the Greeks adopt the "Oct 27 deal" (see below), or won't they?

Sub-issues: 1) will the deal change between now and then? 2) will the Greeks support and enforce the results of their own referendum? (My guess: no.)

Background: In the early-mid 2000s, Greece's economy was strong and the government took advantage by running a large deficit. As the world economy cooled in the late 2000s, Greece was hit especially hard because its main industries—shipping (http://en.wikipedia.org/wiki/Greek_Merchant_Navy) and tourism (http://en.wikipedia.org/wiki/Tourism_in_Greece)—were especially sensitive to changes in the business cycle. As a result, the country's debt began to pile up rapidly. In early 2010, as concerns about Greece's national debt grew, policy makers suggested that emergency bailouts might be necessary.

May, 2010: a €110 billion ($156 billion) rescue plan for Greece launched in May last year.

May, 2011: anti-austerity protestors organized by the Direct Democracy Now! (http://en.wikipedia.org/wiki/Direct_Democracy_Now%21) movement, known as the Indignant Citizens Movement started demonstrating in major cities across Greece.

July, 2011: Germany and France reached a "common position" on a bailout that will include fresh emergency loans.

October 27, 2011: European deal reached, requir[ing] banks to take on 50 per cent losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional 100 billion ($140 billion) in rescue loans as a second bailout package for Greece. Capitalists everywhere heaved a sigh of temporary relief and stocks surged worldwide.

October 28, 2011: Greeks protest nationwide, some in solidarity with OWS, some in reaction to expected increase in austerity measures following European deal of Oct. 27.

October 31, 2011: Prime Minister George Papandreou announced plans for a referendum [to be held in January] in response to riots that followed last week’s proposal, as well as dissent from within his own Socialist party. He said: “The command of the Greek people will bind us. Do they want to adopt the new deal, or reject it? If the Greek people do not want it, it will not be adopted.”

I am going to guess that the majority in Greece will reject the European deal in the January referendum, but not necessarily appreciate the consequences (either of the deal or the rejection of the deal). The Germans and French can't sweeten the deal much more without its own government facing a backlash.

This is even harder to resolve than it looks because of internal Greek grievances and divisions going back to the formation of the post WWII government and grievances with the Germans that go back to the war years themselves.

[RGacky3]

I'm thinkin they'll reject it too, its a lot of money going to greece. But they are going to force more austerity and privitizations, unemployment will go up and the economy will be shit, tax collection takes time, so Greece will still have to borrow money, at rediculously high interest rates. We also have a good amount bank recapatilization, basically securing banks investments.

I personally think Greece should just default and let themselves be kicked out of the Euro, then just build themself up from scratch, they're gonna have to do it anyway.

The problem is the Greeks want to stay in the Euro, but they arn't gonna get a better deal.

[Robert]

Related to part of the OP (Greek war-related grievances against Germany), I completely missed the fact that Germany paid off the war reparations (http://abcnews.go.com/International/germany-makes-final-reparation-payments-world-war/story?id=11755920) it owed, under the Versailles treaty of 1919, just one year ago (Oct. 2010).

And that was just what it owed from WWI.

Reparations from WWII have also been paid, though this took the form of POW labor and seizure of German capital goods (plants and equipment) for the USSR, and patents as reparations to the USA.) http://en.wikipedia.org/wiki/Effects_of_World_War_II#Reparations

Greece got about $105M in WW2 reparations, but it mostly came from ... Bulgaria. God what a mess.:lol:

And it's STILL not over! The Greeks were at the Hague just last month trying to collect on a money judgment against Germany for the "Distomo Village massacre." (http://www.spiegel.de/international/europe/0,1518,786216,00.html)

This is at least part of the reason many Greeks don't want any "loans" from Germany under the current French German agreement.

If Greece just defaults and says "we're staring over, our own currency, etc., see you later," what will foreign bond issuers, like say Germany or the USA, who owe money to Greek banks or even the Greek government, say in return?

How about: "Okay, deal. don't pay. We won't pay you ours either."

[RGacky3]

If Greece just defaults and says "we're staring over, our own currency, etc., see you later," what will foreign bond issuers, like say Germany or the USA, who owe money to Greek banks or even the Greek government, say in return?

How about: "Okay, deal. don't pay. We won't pay you ours either."

Exactly, both options are terrible, but at least they have a chance with the "just start over" one.

Argentina's recovery was helped by ending their currency being pegged to the dollar, Greece bringing back their own currency would have a similar effect (along with everything else).

[Bronco]

It's a big gamble but it might pay off, I think about 70% of the population are in favour of remaining in the Eurozone, even if they are against the bail out terms, so that might well lead to people voting "Yes" in fear of what'll happen if they don't. And it's always possible that if they do vote No, a new bail out will be agreed on softer terms anyway, Greece is probably more of a problem for Europe than Europe is for Greece at the moment

[RGacky3]

It's a big gamble but it might pay off

How would it pay off? If they cut 50% of the debt, they are still screwed, even with a bailout, the economy is gonna contract seriously with the austerity and privitizations that will happen.

[eric922]

Honestly I think they would be better off in the long run if they defaulted. I mean Iceland went through some hard times after their default, but they are doing better now. On the other hand Ireland, I believe, payed off all of their debts and their economy still is pretty bad.

[Bronco]

How would it pay off? If they cut 50% of the debt, they are still screwed, even with a bailout, the economy is gonna contract seriously with the austerity and privitizations that will happen.

Well I thought I'd said that in my post, if he does get a Yes vote it would strengthen his position and I have a feeling that even if they voted No then a new bail out would be agreed anyway, with softer measures. It's like the saying goes "if you owe the bank £100 you have a problem, if you owe them £100 million then the bank has a problem", and that's the situation the EU has with Greece.

Either way, doesn't look like the referendum will take place now anyway

[RGacky3]

Well I thought I'd said that in my post, if he does get a Yes vote it would strengthen his position and I have a feeling that even if they voted No then a new bail out would be agreed anyway, with softer measures. It's like the saying goes "if you owe the bank £100 you have a problem, if you owe them £100 million then the bank has a problem", and that's the situation the EU has with Greece.

Either way, doesn't look like the referendum will take place now anyway

I see, you mean politically, I thought you were talking about pay off in the Greek economy.

[Bronco]

I see, you mean politically, I thought you were talking about pay off in the Greek economy.

Yeah sorry, should have clarified that

[Robert]

I think it depends on what you want.

If you want to hasten capitalism's demise through revolution, which I thought this website was all about, then by all means, urge default. Default everywhere, from Greece to Italy to Spain to Portugal to the USA.

[RGacky3]

I think it depends on what you want.

If you want to hasten capitalism's demise through revolution, which I thought this website was all about, then by all means, urge default. Default everywhere, from Greece to Italy to Spain to Portugal to the USA.


I'm saying whats better for the country itself. (which is defaulting, and even moving beyond capitalism).

But you tell me, what would be the better course for the country?

[Kornilios Sunshine]

Tonight there would be a trust vote for George Papandreou on the Parliament by all the MPs.It is likely that the result will be positive although many MPs of PASOK are not going to vote it..However if it positive I don't really know what is going to happen.You should have seen yesterday how he talked(George Papandreou)..he was very afraid and even seemed psychologically tired..fuckin cappie die!

[Robert]

But you tell me, what would be the better course for the country?

They should pay the bonds that I hold and fuck the rest.

No, I think they should put it to a vote and let the people or their representatives decide.

But they need to allow fulsome debate (no "shouting down" the conservatives) so that the Greeks don't think it'll just be "happy days are here again!" if they just walk away from their debts. Default will wreck their currency, increase costs of imports (like oil and technology) and prevent them from raising money in the world bond markets for decades to come.

Personally, I think they should give the haircut a try.

[RGacky3]

Default will wreck their currency, increase costs of imports (like oil and technology) and prevent them from raising money in the world bond markets for decades to come.


Like it did in Argentina and Iceland?

[Robert]

Whoa, Argentina didn't completely walk away form all its debt, as I understand it:

Even as the economic situation improved, the amount of the debt was still the largest defaulted debt in history (about 93 billion USD), and Argentina was in no position to pay without sacrificing essential parts of its budget (http://en.wikipedia.org/wiki/Budget).
The Argentine government kept a firm stance, and finally got a deal by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value (25–35% of the original) and at longer terms. Among these bonds, some are indexed based on the future economic growth of Argentina.


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


That's the approach France and Germany are recommending for Greece,



That's a little different from just telling the whole bond market "fuck you, we're bankrupt."


Iceland's story is more recent and is developing. I don't pretend to know anything about it.


But ... if all these struggling European countries want to tell its bondholders to fuck off, well, okay by me. I'll remember.

[RGacky3]

Whoa, Argentina didn't completely walk away form all its debt, as I understand it:

Even as the economic situation improved, the amount of the debt was still the largest defaulted debt in history (about 93 billion USD), and Argentina was in no position to pay without sacrificing essential parts of its budget (http://www.anonym.to/?http://en.wikipedia.org/wiki/Budget).
The Argentine government kept a firm stance, and finally got a deal by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value (25–35% of the original) and at longer terms. Among these bonds, some are indexed based on the future economic growth of Argentina.


Sure, but what they did'nt do was go along with pivitizations and cuts that Europe is demanding of Greece, infact they did socializations and put in new regulations to protect their economy.

the 50% cut is'nt what bothers me, it what comes with it, the IMF like policies that would be forced to be implimented.

[Kornilios Sunshine]

UPDATE : The trust vote got 153 votes from PASOKs MPs,so George Papandreou didn't quit.Some MPs of PASOK said they wouldn't vote for trust of the Prime Minister ; howeve, they actually did.

[RGacky3]

Things are going down ... Way to bait and switch.