The crisis thread

[Parisien]

The Irish was quite different BB......but theirs was based on a property boom which then turned to bust........ie...banks lending on development land which is now worth only 10% of its value in 2007.....personal debt wasn't much different to UKs......currently Irelands exports are healthy and improving and they have the most open markets in the world apart from Hong Kong.


P

 

[bigbob]

The problem in Ireland was caused by artifically low interest rates. The Irish economy had excessive inflation and needed interest rates to rise appreciably to kill it off. However, interest rates were set by the ECB to suit the German economy which was sluggish as it's manufacturing base regained competiveness so Ireland had a boom period followed by a bust. Was always going to happen, any monetary economist would tell you.

It was real shame for Ireland as their business model with low corporation tax rates for inward investment into export led manufaturing businesses was a success story. If Ireland had stayed with the punt then it would be really strong today. A simple case of politicians leading the people into something that was short term good but long term bad.

 

[Mr.Cambio]

Oooh.. i see there was a lot to read once i came back! Many thanks for your feedback, i want to answer the following:

1)Matt and Frank, you have not chosen the right places for vacations. Aegina is not that good comparing to other islands and Rhodes is a place for mass tourism, meaning that quality is not high.But, it's a well known place for UK teenagers. If you need any help, send me a pm.I'd be glad to help.
2)Dem is right speaking that Greeks refuse to pay tax, but he only talks about the businessmen. The average Greek pays tax, but the businessmen have close relations to the polititians.They do act as a cover for each one.. Besides, most offshores are from polititians. The rest is from shipping companies, which is 'legal'.
3)Tourism is our industry, cause GR does not produce cars, for example. We're idiots to have our prices up. Went to Turkey(Cesme/Izmir) last year: We're far a better environment, but there are new hotels and newily built areas, where prices are more than reasonable.
4)With the current legal status of EU, GR cannot be out of the EU, as long as Portugal, Ireland or Spain. They just want to fear us.
5)Agree that if we get back to drachma, the currency of the bank accounts should be in pounds or dollars, not euros, not drachmas
6)Agree that beeing in drachma, the recovery would be faster.

What my question is, and this is the reason i asked ''what happens now'', is the following:
Would you visit GR now or are you suspicious? People say that in crisis-periods, there are a lot of opportunities.I believe in this. I am thinking of doing a business that has to do with tourism.This thought has been in my mind for years, and i wonder if somewhere is the right time for doing this.

 

[Elliott653]

As for the OP, I would get all liquid assets (deposits, shares etc) out of Greece and into more stable currencies - US dollar, sterling, swiss franc. You can then bring them back in at more advantageous rates once Greece is out of the Euro. Once Greece is out, it will have depreciating currency and high inflation. The latter will erode the real value of all the debt along with the default percentage. My view is that Greece is going to have five years of pain but if it stays in the Euro, it will be ten years.

I agree with this advice.

 

[Emtee]

Defaulting is better than austerity.

How do you come to this conclusion BB?

Greece (and others) are effectively already in default, but the EU/ECB/IMF are trying to manage it without closing off the very thin lines of credit available, something that's been given the rather catchy title of austerity.

Other than market jitters, Greece's situation has largely been 'accounted' for within the banking system; what the EU/ECB/IMF are trying to avoid is those 'accounts' becoming governmental, given they're the lender of last resort.

If Greece (and the others) force a default they will there-after cause a banking default and there-after a governmental write-down of truly global proportions. An economic nuclear winder would ensue and we'd all feel the chill.

There is only so much money in the world and we've all but spent it. Doesn't matter what's on the front of the bank notes, the books still need to be balanced.

 

[bigbob]

No charge.

 

[bigbob]

How do you come to this conclusion BB?

Greece (and others) are effectively already in default, but the EU/ECB/IMF are trying to manage it without closing off the very thin lines of credit available, something that's been given the rather catchy title of austerity.

Other than market jitters, Greece's situation has largely been 'accounted' for within the banking system; what the EU/ECB/IMF are trying to avoid is those 'accounts' becoming governmental, given they're the lender of last resort.

If Greece (and the others) force a default they will there-after cause a banking default and there-after a governmental write-down of truly global proportions. An economic nuclear winder would ensue and we'd all feel the chill.

There is only so much money in the world and we've all but spent it. Doesn't matter what's on the front of the bank notes, the books still need to be balanced.

Your scenerio is highly likely too Miles. My view is that the markets want the Germans to junk one or two weak members of the Euro then liquidity will improve, this is not a melt down scenerio as we are past that stage.

For those that go, they can reflate in old school style to erode the real value of debt and get exporters working and their tourism industries buoyant. The austerity measures are far too painful to be deliverable without widescale popular unrest. Greece and Portugal should go - its better for them.

 

[Emtee]

Your scenerio is highly likely too Miles. My view is that the markets want the Germans to junk one or two weak members of the Euro then liquidity will improve, this is not a melt down scenerio as we are past that stage.

For those that go, they can reflate in old school style to erode the real value of debt and get exporters working and their tourism industries buoyant. The austerity measures are far too painful to be deliverable without widescale popular unrest. Greece and Portugal should go - its better for them.

I'd have to take a more sceptical view of the market BB, as I don't think it has any regard to the politics of the Union, it couldn't give a fig about it, who's in it, and who isn't. It simply demands to make money, and if making money gets more difficult, it'll control its risk and protect its routes of escape.

With that said it has covered Greece and Ireland, but it's still coming to terms with Spain and Portugal and it's scared ****less of an Italian default. Contagion is a nasty virus and the banks, money lenders, funds, call them what you will don't have the cure. They're praying that Germany and Chino-France do.

I don't disagree with the theory of reflation, but Greece, Spain and Portugal don't have a viable economy, not in the short term, and probably not even within a 25 year term. In the meantime?...

I do agree that austerity needs to be managed with popular, albeit begrudging support, something it currently doesn't have, but this is at least a medicine; it tastes nasty, but it's a medicine nonetheless.

 

[bigbob]

....and equities are rising in the UK.

 

[Phil H]

IMHO Greece is now a sideshow for project Euro; convenient for some, not for others but too far gone to be of relevance. Maybe Greece should stick two fingers up to Europe, withdraw, and with a serious dose of fiscal reality look to a future outside a project that was doomed from the outset anyway. Although recovery would be painful and prolonged could it be any worse than continuing to borrow vast sums that can never be repaid and which serve only to increase the country's exposure external political control?

As for the rest of Europe, well it's eventually going to hit the buffers anyway with or without the assistance of Greece, Portugal, et al. To my mind it's the grandest Ponzi scheme of all which may explain why Brussels doesn't like too much scrutiny of its accounts.

PH

 

[Emtee]

....and equities are rising in the UK.

Took a bath in August (as did everyone) but putting aside the jitters since then, absolutely. The security of Sterling? Reasonably well managed austerity? Or simply the market shifting it's ill-begotten to a less unsafe haven? Avenues of escape.

 

[hodroyd]

We should all keep our eyes on the exchange rate, it's slowly slipping against us for MC and we will need every cent we can get.

 

[Geofflyn]

We should all keep our eyes on the exchange rate, it's slowly slipping against us for MC and we will need every cent we can get.

All depends where you sit.....exchange rate looks just fine to us down here. Your Masers get cheaper for us every day.
Geoff

 

[Parisien]

We should all keep our eyes on the exchange rate, it's slowly slipping against us for MC and we will need every cent we can get.

...why R......you gunna buy all of MC......in a multi-billion euro deal or......


P

 

[Elliott653]

All depends where you sit.....exchange rate looks just fine to us down here. Your Masers get cheaper for us every day.
Geoff

Get rid of your ridiculous PM and all would be Hunky Dory.

 

[Geofflyn]

Get rid of your ridiculous PM and all would be Hunky Dory.

Really can't argue with that....

 

[dem maser]

theres no sign of any recession in my job....selling loads...many people have cash also...whats going on??

 

[hodroyd]

No recession here either, good job I have got 2 screens so that I can chat to you guys and continue with work. As for Geofflyn, hands off our massers!!

 

[dem maser]

im on here a lot lately during the day but thats because my viewing are mainly in evening....

came home yesterday with another sale....so not bad....closed jan with 5 sales!! not bad......

 

[bill]

This is all very interesting but.....if Greece defaults then this would be the first domino to world calamity. This is why the Germans and the French are trying to prop Greece up. The "markets" were lending to each other and to governments at a time when the value of everything was going up and it was thought it would never end. In 2008 I would love to have seen the faces in a meeting that all must have had where someone must have asked the question "you know all that money we are lending.....where is it???". This is the point where they all falling over themselves to have tea with China....
I don't know much about "high finance". I have a small business which turns over x, costs y and makes a profit z of which I pay tax Ω! All I have to make sure that profit Z gets better every year so I can enjoy life and my masser and the credit card is paid in full every month. I think that until all businesses, households and governments are run this way we and our children and our children's children, will never see the end of all this.
A few other thoughts:
GREECE SHOULD HAVE NOT JOINT THE EURO BECAUSE IT DID NOT MEET THE CRITERIA: Who did that joined?? All the government (including Greece) paid lots of money to "high finance institutions" to cook the figures so they could all join
NOBODY PAYS TAX IN GREECE: firstly this is wrong most people by far pay tax in Greece. The issue is the people that don't, tend to be high earners like doctors, lawyers, businesses
GREECE IS A CASH ECONOMY:Its true a lot of trade in Greece is done by cash. The fact is this is an issue the world over not just Greece. I could also argue this is a good thing from a debt point of view as "no money, no buy"
GREECE SHOULD LEAVE THE EURO: This is not good for Europe (the debt is with mostly European institutions) nor Greece (how else can Greek politicians that cant run a ΠΕΡΙΠΤΕΡΟ (CORNER SHOP) be kept in check)

What I would like to know is two things: Where has the 350 billion gone and who approved the loans to Greece?? I suspect some of these people have (or had!) peerages or are still in charge. I wonder if we will ever find out...