Saturday, 4 July 2015

Whatever the outcome, Greece wins, Germany loses?

I know the economics of all this are horrendously complicated, but reading the full spectrum of comment and analysis in the papers today, there appear to be 2 outcomes;

No vote - Greece leaves Euro, returns to drachma, immediate hyperinflation then settles down to reasonable debt-free prosperity, Germany loses €300bn of debt

Yes vote - Greece stays in Euro, ECB maintains immediate liquidity, IMF insists on Greece's debtors (Germany foremost amongst them) taking a severe haircut on the outstanding debt to the extent that allows Greece a working, if austere, economy. 

Is that it? If so, poor old Herman the German must be feeling a bit miffed at the EU right now. Still, having paid for Greece's new roads, air terminals and comms infrastructure at least they'll get those sunbeds cheap next year.


Cascadian said...

Whatever the outcome, profligate wins, frugal loses?

As Greeks with bank deposits may soon find out. Everybody loses when socialism takes hold.

Cuffleyburgers said...

Cascadian - as usual hopelessly misunderstanding the case. The real problem in the euro is Germany. They have an unbalanced economy and one which was always going to cause problems for the other members of the eurozone. The were among the first to run a deficit above the maastrict limit.

I am not happy that they are on the hook for over 80bn of bad debts in greece for which they have never democratically beem asked but just as the greeks are to blame for their economic disaster so are the germans for the fact that they have allowed their government to run up these debts ontheir behalf.

Everybody knows that when the bad bank debt was transferred the tax payers on 2012 or whenever, hat greece was never going to pay back all of of it but the protests wete muted. Sine then greece has been put through the meat grinder and finally have elected a government whose is prepared to tell the troika to fuck off. It isnow time the germans did likewise.

Cascadian said...

I bow to the superior analysis of cuffleyburgers- "The real problem in the euro is Germany" HoHoHo. Nothing at all to do with socialists.

Yikes you are scary.

Dave_G said...

"Get the sunbeds cheap next year"??

The Germans will consider they OWN them.

Much as they do ALL sunbeds.....

Cuffleyburgers said...

Of course the fundamental problem is socialism - as practised by the eu at the behest of germany.

But the point is that if the eu didnt exist nobody would give a shit if some german bank lost money on loans to the greek govt. as it is we all stand to lose.

And for those readers on the other side of the herring pond (Cascadian) germany is the big ome just to right of France, which is the square one , just under England.

Budgie said...

Well said, Cuffleyburgers.

The EU was warned against the "one-size-fits-all" euro experiment. Well, Greece today is an example of that error working in practice.

The ECB bank rate was set too low for the Greek economy in the 2000s, because Germany was in the doldrums and needed a boost. A low bank rate in a booming economy spells trouble in any country.

So it is not entirely the fault of the Greeks: the euro system itself and German dominance are at least as much to blame. And when "austerity" (that politically hi-jacked, and hence meaningless word) creates an economy that shrinks more than it saves, it becomes pointless if not cruel.

Mind you, Germany continues to benefit from the mercantilism enabled by a euro dragged down in value by the club-med countries.

DeeDee99 said...

Whatever happens, Germany should reluctantly accept that they stole £millions from Greece during WW2 which was never repaid. And they also had massive debt relief following the war, so they could rebuild their country and economy.

Greece didn't get any assistance.

So "payback time" is morally just.

I hope Greece breaks free of the Euro. Sovereignty and Democracy should not be up for sale.

john cheshire said...

For what it's worth I think that the Greeks will vote no and the EU will ask them to vote again until they give the right answer.

G. Tingey said...

Over 70 years ago now - forget it, idiot.

Posting after "NO" vote in.
Will comment further in/on next thread