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On July 07 2015 18:58 maartendq wrote:Show nested quote +On July 07 2015 18:47 CuddlyCuteKitten wrote:On July 07 2015 18:43 zlefin wrote:On July 07 2015 18:38 xM(Z wrote:
after a default, can greeks adopt another country currency(with its permission + signed deals/contracts ofc)?.
any random currency worth 20% - 30% of 1$ or something. it's definitely possible, not sure if any country will sign on or not. https://en.wikipedia.org/wiki/Currency_substitution#Countries_using_the_US_dollar_exclusivelyit looks like Ecuador has such an arrangement, as do several others. No because how will they get dollars? It's not like the US will magically give them cash, they can't print it themselves. So what will they trade for it? Picking up another countries currency will just make the situation far worse. It's what you do when you have rampant inflation, not what you do when you want to devalue a currency. Edit: Also you can't have a negative trade balance when using another countries currency because then you simply run out of cash. It has to be somewhat level. I'm probably wrong about this, but isn't currency devaluation relatively pointless in countries whose economies service mainly the domestic market?
Yes but Greece is running a trade deficit and has a large tourist sector and needs to make the few industries it have more competitive.
Think of it this way instead, it's just an other way of getting austerity.
You don't want to lower wages and pensions so instead you switch currency.
A flat screen TV from Germany cost 200 Euro. Your pension is 1000 Euro. You can buy one.
But then with the new currency (probably parallel) the TV costs 200 Euro and 1000 Drachma. Your pension is 1000 Drachma.
Wage cut by 80 % for anyone not getting their pay in Euros!
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On July 07 2015 19:01 xM(Z wrote:
greeks do the math and end up with a theoretical exchange value for their would be new currency; check currencies at or around that value; sign deals, import currency, own up to their math.
they could also find a country with surplus that would benefit from some currency devaluation.
Import currency with what? Their broke.
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with words and promises mostly  but it will actually depend on the deals they'll be able to make. someone might want something from the greeks, something that EU takes for granted.
since they can't print money (they don't have a printing press and getting one up and running, i imagine, would be a huge pain with all those anti-counterfeit measures + resources required), a weaker currency would improve their trading power and allow them to recover faster/easier.
they'll just buy chinese TVs at 30$ for a while.
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Couldn't they just print Euros, stamp some holes in them and stamp them with something?
Would require supervision so they don't print actual Euros.
Or EU could just pay for new plates that fit in their printing facility, use the same paper and countermeasure thingies but print Drachma and different motives on it.
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On July 07 2015 19:53 CuddlyCuteKitten wrote:Show nested quote +On July 07 2015 18:58 maartendq wrote:On July 07 2015 18:47 CuddlyCuteKitten wrote:On July 07 2015 18:43 zlefin wrote:On July 07 2015 18:38 xM(Z wrote:
after a default, can greeks adopt another country currency(with its permission + signed deals/contracts ofc)?.
any random currency worth 20% - 30% of 1$ or something. it's definitely possible, not sure if any country will sign on or not. https://en.wikipedia.org/wiki/Currency_substitution#Countries_using_the_US_dollar_exclusivelyit looks like Ecuador has such an arrangement, as do several others. No because how will they get dollars? It's not like the US will magically give them cash, they can't print it themselves. So what will they trade for it? Picking up another countries currency will just make the situation far worse. It's what you do when you have rampant inflation, not what you do when you want to devalue a currency. Edit: Also you can't have a negative trade balance when using another countries currency because then you simply run out of cash. It has to be somewhat level. I'm probably wrong about this, but isn't currency devaluation relatively pointless in countries whose economies service mainly the domestic market? Yes but Greece is running a trade deficit and has a large tourist sector and needs to make the few industries it have more competitive. Think of it this way instead, it's just an other way of getting austerity. You don't want to lower wages and pensions so instead you switch currency. A flat screen TV from Germany cost 200 Euro. Your pension is 1000 Euro. You can buy one. But then with the new currency (probably parallel) the TV costs 200 Euro and 1000 Drachma. Your pension is 1000 Drachma. Wage cut by 80 % for anyone not getting their pay in Euros!
Wage cuts in terms of tradables, yes (it's a feature, not a bug). For non-tradables (in terms of household expenses, this means practically every service, including stuff that really weighs down on a budget like rent), there's no arbitrage to force the new price, so they become relatively cheaper.
The bigger difficulty is getting people to accept this, and this is probably the biggest inflation risk (workers try to readjust their wages in terms of tradables -> government accomodates them with monetary policy -> inflation -> currency devaluation ->repeat).
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Btw, anyone with a short statement as to why Greeks voted against the deal? My understanding is that they still want all their welfare instead of relying on hard work to save the economy? ie a bankrupt wanting to continue their spending ways
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On July 07 2015 21:43 Sbrubbles wrote:Show nested quote +On July 07 2015 19:53 CuddlyCuteKitten wrote:On July 07 2015 18:58 maartendq wrote:On July 07 2015 18:47 CuddlyCuteKitten wrote:On July 07 2015 18:43 zlefin wrote:On July 07 2015 18:38 xM(Z wrote:
after a default, can greeks adopt another country currency(with its permission + signed deals/contracts ofc)?.
any random currency worth 20% - 30% of 1$ or something. it's definitely possible, not sure if any country will sign on or not. https://en.wikipedia.org/wiki/Currency_substitution#Countries_using_the_US_dollar_exclusivelyit looks like Ecuador has such an arrangement, as do several others. No because how will they get dollars? It's not like the US will magically give them cash, they can't print it themselves. So what will they trade for it? Picking up another countries currency will just make the situation far worse. It's what you do when you have rampant inflation, not what you do when you want to devalue a currency. Edit: Also you can't have a negative trade balance when using another countries currency because then you simply run out of cash. It has to be somewhat level. I'm probably wrong about this, but isn't currency devaluation relatively pointless in countries whose economies service mainly the domestic market? Yes but Greece is running a trade deficit and has a large tourist sector and needs to make the few industries it have more competitive. Think of it this way instead, it's just an other way of getting austerity. You don't want to lower wages and pensions so instead you switch currency. A flat screen TV from Germany cost 200 Euro. Your pension is 1000 Euro. You can buy one. But then with the new currency (probably parallel) the TV costs 200 Euro and 1000 Drachma. Your pension is 1000 Drachma. Wage cut by 80 % for anyone not getting their pay in Euros! Wage cuts in terms of tradables, yes (it's a feature, not a bug). For non-tradables (in terms of household expenses, this means practically every service, including stuff that really weighs down on a budget like rent), there's no arbitrage to force the new price, so they become relatively cheaper. The bigger difficulty is getting people to accept this, and this is probably the biggest inflation risk (workers try to readjust their wages in terms of tradables -> government accomodates them with monetary policy -> inflation -> currency devaluation ->repeat).
That is true. But it's also the reason I think running two currencies and staying in the Eurozone makes sense for Greece. Export industries and the tourist industry get their money in Euros and people will realize easier that inflation is useless because they have something to compare too. It also means that trading with Greece is just as easy as before and taxing Euro income gives the goverment some harder currency that theoretically could go to buying things they really need (in practice it will go to pay Syriza clientele probably).
In theory you could use 2 currencies for as long as you need in order to make necessary reforms and deflate government wages and expenditure. Then when your ready you can renegotiate debt relief and readjust government pay/pension to Euro (with the current exchange rate of course) and use Euro to trade in all Drachma in circulation.
But EU is going to have to support Greece with humanitarian aid and keep power and water running and probably give the police force enough money to function while shit goes down.
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On July 07 2015 21:50 DucK- wrote:
Btw, anyone with a short statement as to why Greeks voted against the deal? My understanding is that they still want all their welfare instead of relying on hard work to save the economy? ie a bankrupt wanting to continue their spending ways
Years of crippling unemployment with no end in sight and a population that is sick of it. Even if they could work, they don't have the option. And lets not forget that there were banks that received much larger bail outs for being far more irresponsible than Greece.
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On July 07 2015 21:58 Plansix wrote:Show nested quote +On July 07 2015 21:50 DucK- wrote:
Btw, anyone with a short statement as to why Greeks voted against the deal? My understanding is that they still want all their welfare instead of relying on hard work to save the economy? ie a bankrupt wanting to continue their spending ways Years of crippling unemployment with no end in sight and a population that is sick of it. Even if they could work, they don't have the option. And lets not forget that there were banks that received much larger bail outs for being far more irresponsible than Greece.
What does it have to do with banks? Greece is just borrowing money since forever, ofcourse it's coming back at some point, and now it's evil bank? Greece just has the a economy of a 4th. world country. They import 80% of their meat, even tho they have good land, they hardly produce anything but olives and wine, and rely on chairty since ages. A country shouldn't depend 100% on foreigners grace to sustain themselves imho, and if they do they should have used the help offered to work on it, which they refused every time and now absolutly. That's why noone knows what will happend to them. They don't produce own medicine, and the german company was paid in greece goverment bonds which got mostly cut, after that loss they only deliver the urgend things. I mean it#s hard to say because the young generation now, it's not their fault, they grew up in crises, but everyone else voted with constant 80% for parties who didn't collect tax and build a giant state-officer-system.
The attempts to smaller the officer-system were unsaid by the current goverment, only working backwards, while still wanting to live on charity.
add: That what annoyes most of the nordic countries, that most countries understand that their situation isn't good and only after a few hard years good years and modernisation can follow, but greece refusing to cooperate for years and delaying the crises for 7 years, is what makes the difference.
Greece sometimes say "german debt was cut by 50% after the ww2", yes, but so was greece debt already, there are alread billions, and there is zero change, that's how ineffective the greece are, they either need an european dictate to moderinize the country or they need to go back to their currency and find a way by themself or continue to live on welfare forever (like the usa & china and everyone who doesn't have to pay) wants them to.
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On July 07 2015 21:50 DucK- wrote:
Btw, anyone with a short statement as to why Greeks voted against the deal? My understanding is that they still want all their welfare instead of relying on hard work to save the economy? ie a bankrupt wanting to continue their spending ways
The same reason they elected Tsipras and his ridicolous campaign promises. Life in greece isnt fun compared to say 10 years ago when the economy was inflated from cheap euro money.
They still havent realized they need to take big cuts in living standards in one form or the other.
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Zurich15366 Posts
On July 07 2015 22:31 Kenpark wrote:Show nested quote +On July 07 2015 21:50 DucK- wrote:
Btw, anyone with a short statement as to why Greeks voted against the deal? My understanding is that they still want all their welfare instead of relying on hard work to save the economy? ie a bankrupt wanting to continue their spending ways The same reason they elected Tsipras and his ridicolous campaign promises. Life in greece isnt fun compared to say 10 years ago when the economy was inflated from cheap euro money. They still havent realized they need to take big cuts in living standards in one form or the other.
If you follow this rather weird logic, Greece right now is pretty much at the level it would have been following its growth trajectory pre-Euro. So if you are asking for "correction" for the inflated growth, it has already happened. Any more is disingenuous even following this weird path of reasoning.
+ Show Spoiler [follow the trajectory since 1985] +
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@Gorsameth
"Greece arrives at last-chance talks empty-handed" (http://www.ft.com/home/europe - behind a paywall tho)
But supposedly they will have a plan by tomorrow. I mean, saving Greece is a piece of cake after all, right?
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On July 07 2015 22:45 Alathya wrote:
@Gorsameth
"Greece arrives at last-chance talks empty-handed" (http://www.ft.com/home/europe - behind a paywall tho)
But supposedly they will have a plan by tomorrow. I mean, saving Greece is a piece of cake after all, right?
yeah... a plan tomorrow right....
Not having anything today is just an insult. Brilliant way to restart the negotiations.
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On July 07 2015 21:57 CuddlyCuteKitten wrote:Show nested quote +On July 07 2015 21:43 Sbrubbles wrote:On July 07 2015 19:53 CuddlyCuteKitten wrote:On July 07 2015 18:58 maartendq wrote:On July 07 2015 18:47 CuddlyCuteKitten wrote:On July 07 2015 18:43 zlefin wrote:On July 07 2015 18:38 xM(Z wrote:
after a default, can greeks adopt another country currency(with its permission + signed deals/contracts ofc)?.
any random currency worth 20% - 30% of 1$ or something. it's definitely possible, not sure if any country will sign on or not. https://en.wikipedia.org/wiki/Currency_substitution#Countries_using_the_US_dollar_exclusivelyit looks like Ecuador has such an arrangement, as do several others. No because how will they get dollars? It's not like the US will magically give them cash, they can't print it themselves. So what will they trade for it? Picking up another countries currency will just make the situation far worse. It's what you do when you have rampant inflation, not what you do when you want to devalue a currency. Edit: Also you can't have a negative trade balance when using another countries currency because then you simply run out of cash. It has to be somewhat level. I'm probably wrong about this, but isn't currency devaluation relatively pointless in countries whose economies service mainly the domestic market? Yes but Greece is running a trade deficit and has a large tourist sector and needs to make the few industries it have more competitive. Think of it this way instead, it's just an other way of getting austerity. You don't want to lower wages and pensions so instead you switch currency. A flat screen TV from Germany cost 200 Euro. Your pension is 1000 Euro. You can buy one. But then with the new currency (probably parallel) the TV costs 200 Euro and 1000 Drachma. Your pension is 1000 Drachma. Wage cut by 80 % for anyone not getting their pay in Euros! Wage cuts in terms of tradables, yes (it's a feature, not a bug). For non-tradables (in terms of household expenses, this means practically every service, including stuff that really weighs down on a budget like rent), there's no arbitrage to force the new price, so they become relatively cheaper. The bigger difficulty is getting people to accept this, and this is probably the biggest inflation risk (workers try to readjust their wages in terms of tradables -> government accomodates them with monetary policy -> inflation -> currency devaluation ->repeat). That is true. But it's also the reason I think running two currencies and staying in the Eurozone makes sense for Greece. Export industries and the tourist industry get their money in Euros and people will realize easier that inflation is useless because they have something to compare too. It also means that trading with Greece is just as easy as before and taxing Euro income gives the goverment some harder currency that theoretically could go to buying things they really need (in practice it will go to pay Syriza clientele probably). In theory you could use 2 currencies for as long as you need in order to make necessary reforms and deflate government wages and expenditure. Then when your ready you can renegotiate debt relief and readjust government pay/pension to Euro (with the current exchange rate of course) and use Euro to trade in all Drachma in circulation. But EU is going to have to support Greece with humanitarian aid and keep power and water running and probably give the police force enough money to function while shit goes down.
I'm not sure it can work out like you're describing, but I'm also not sure I know the specifics about transitioning from another country's currecy into your own (Brazil has had many currency changes, but never leaving another country's currency, except maybe back at the independence). My guess is that they would exchange euro into drachma at 1 to 1 internally while setting the exchange rate at 1 to 1.5 and controlling capital flows and currency black markets so that there's no arbitrage opportunities.
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Greece reminds me of one of those people who somehow gets a few million dollars in loans (in one way or another) and lives lavishly and far beyond their means. When the money runs out the first time, they're able to get another loan (ostensibly since they have assets, which they acquired with funds from the previous loan or by falsifying records). Then when the money really runs out... they have no plan.
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Yes, very bad that Greece has no plan. They should have one, imo. (assuming it isn't fake spin, which it may be)
But does Europe have a plan about debt restructuring? If they don't, kettle blabla. They forced V to resign, but kept Dijsselbloem, have no improved offer off their own. So what is their positive contribution? This problem is 5 years old. They had a lot of leverage to change things in Greece, and they indeed reformed Greece society. But they only made the problems worse.
Syriza is new, didn't cause the original problem, are victim of sabotage, but now it is their fault they don't have a new plan?
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On July 07 2015 22:45 Alathya wrote:
@Gorsameth
"Greece arrives at last-chance talks empty-handed" (http://www.ft.com/home/europe - behind a paywall tho)
But supposedly they will have a plan by tomorrow. I mean, saving Greece is a piece of cake after all, right?
This is just utter incompetence and the Greeks should have Tsipras' head on a plate for this. But I'm sure the Greek media will spin this as the big bad Troika being unwilling to cooperate... somehow.
It's also not as if they have anything else to do. Saving Greece is the ONLY job that Schauble, Dijsselbloem, Juncker, Draghi, Legrande and the rest have. It is therefore not a problem at all to have them all sit around and wait while Syriza gets their shit together.
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On July 07 2015 22:43 zatic wrote:Show nested quote +On July 07 2015 22:31 Kenpark wrote:On July 07 2015 21:50 DucK- wrote:
Btw, anyone with a short statement as to why Greeks voted against the deal? My understanding is that they still want all their welfare instead of relying on hard work to save the economy? ie a bankrupt wanting to continue their spending ways The same reason they elected Tsipras and his ridicolous campaign promises. Life in greece isnt fun compared to say 10 years ago when the economy was inflated from cheap euro money. They still havent realized they need to take big cuts in living standards in one form or the other. If you follow this rather weird logic, Greece right now is pretty much at the level it would have been following its growth trajectory pre-Euro. So if you are asking for "correction" for the inflated growth, it has already happened. Any more is disingenuous even following this weird path of reasoning. + Show Spoiler [follow the trajectory since 1985] +
Big cuts in living standard might also mean actually paying the variety of taxes that aren't being collected effectively or not having ridiculous government employment.
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On July 07 2015 22:59 ticklishmusic wrote:
Greece reminds me of one of those people who somehow gets a few million dollars in loans (in one way or another) and lives lavishly and far beyond their means. When the money runs out the first time, they're able to get another loan (ostensibly since they have assets, which they acquired with funds from the previous loan or by falsifying records). Then when the money really runs out... they have no plan.
Having worked at the end of that story for years in debt collection, I can tell you that the real question is how they got to borrow the money in the first place. And in the previous lending climate, it was mostly because lenders were idiots and didn’t care. Blaming the borrower is only half the equation. It’s why I never feel bad when my client’s get their debt wiped out during bankruptcy.
I don’t think that’s 100% true for Greece, but it’s part of the discussion. Trying to get blood from a stone is normally fruitless.
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EPT![[image loading]](http://www.multpl.com/chart/greece-gdp-per-capita-9cb4a5b8930ae650.png)
