Greeks vote to reject incumbants, austerity

[Caper]

The allowance of tomfoolery for this thread has been exceeded, so focus. Those who give a darn and might understand (and don't let dudalb and timhau out), this what I reckon is going to happen:

• If NO wins, certain things will happen. If YES wins, exactly the same things will happen.
• There's no way the banks are opening next Tuesday in any condition near to normal (I'd rather say they're not opening at all)
• The ECB will be assisting Greece again, but using a dropper: maybe one or two thousand millions a month and increasingly less.
• Every kind of substitute will flourish as the government will promote it: free bank accounts and debit cards for pensioners and rural folk, free POS system on mobile phones for small stores, plumbers, etc.
• Capital will probably continue to flee the country, some 3 o 4 thousand millions a month -with weeks of apparent calm-, as bank bills into mattresses, tea cans under floor boards -a lot of stone there- and later as a strange kind of tourism: people travelling to Plovdiv, Bari, Izmir or Edirne, just for the day with little brick-sized packages and coming back empty handed.
• Grexit is already a fact. The rest is theatre and denial while they try to blame each other. Once all the blame is allocated, fairly or unfairly, Grexit will be publicly revealed. Maybe in 6-9 months, with Siriza on charge or whitout it, no difference.
• I expect next week the début of the black market for the ghost euro, the transient currency of Greece. I bet a rate of 0.9, that is 1,000€ within the corralito in exchange for 900€ in notes or a cheque on Frankfurt, Paris, London or Zurich. The rate will worsen rigorously following Gresham's Law.
• The Greek government will withhold the launching of the IOUs -the second transient currency- for some time while there's still hope to reach some kind of agreement and "avoid" the fait accompli of Grexit. Anyway, some sort of private monetary emission will emerge, like 20€ postdated to-the-bearer bank cheques from solid corporations or individuals (or their front men).

Because, let's stop beating the bush and admit it: there's no way Greece can be now a part of the Eurozone. Imagine a scenario of the Greek government signing any plan and banks fully opening: capital will flee, no matter there might be weeks of calms and some thousand millions may be thrown into the Greek banking system to promote trust and tranquillity. Anyway, more than a half of the Greek banking system is out of the country, and almost all the rest will follow. They'll only be left meagre bank capitals, government deposits, spare change, all to attend public credit cards. And nothing else. The rest is just collecting payments from old loans and sending them to the ECB in order to pay what stands out and is overdrawn.


Greece would be left without a banking system and forced to pay through its private sector what its public one is bailed out. Such a country can't avoid a spiral of economical contraction so, be realistic, either they threw 50 thousand millions of fresh money (Darwin forbids!) over a third bail out just in order to buy time -cause the Euro is killing Greece and no life support will change that- or they accept reality and let Greece to have their own currency.


And like Forrest said: that's all I have to say about it.

That sounds like Greeks have a pretty hopeless choice.

 

[GlennB]

That sounds like Greeks have a pretty hopeless choice.

Apart from his closing sentence. Unpleasant, certainly, but imo the only hope in the long term

 

[aleCcowaN]

Sure.

It looks like any bus takes you to Putin's palace. What's the secret? Hijacking?

 

[aleCcowaN]

That sounds like Greeks have a pretty hopeless choice.

But, let's make it clear that beyond the HUMONGOUS blunder of joining the Eurozone, the rest is all Greek doing. The Greeks were who vacated their banking system by taking 120/150 thousand millions out of it in a few years, plus perhaps 70 additional thousand millions of undeclared money. They made it unsustainable. There were no new loans to build homes, and construction is one of the most dynamic sectors in the economy -one that creates a lot of employment and one that flourishes or withers away very quickly-. There were no new loans for industrial corporations to modernize.

If you translate those figures into the United States, it's like 10 trillion dollars had fled the country during the last 5 years and the stock markets and public debt had lost other 15 trillion. What would its people think about it? What would it be the state of its economy today? I bet it would be way worse than today Greece's -because the Greeks are more adaptable as they are more used to this kind of crisis and have kinder institutions than the friendly kick_in_the_arse of foreclosure-.

And that is all high and mid-high class doing. And not because they are "oligarchs" or egotists and their money is to be distributed amongst the disenfranchised. Not at all! It's because the upper classes have responsibilities. The secret of capitalism is balancing those responsibilities with the egotistic interest of every individual. And it works. That's why other different systems depend on fear and obedience. Whatever step taken to oppose responsibilities to egotistic interest will make capitalism to shake, and by adopting the Euro and then spending as there is no tomorrow the Greeks built a coffin around themselves. Now they call for a referendum to discuss if the final nail is to be hammered or not. Too late.

 

[aleCcowaN]

For a few seconds he reminded me of myself in 1989, during hyperinflation; one of those rare occasions you are punished with the ordeal of Sisyphus for other people's sins.

 

[Childlike Empress]

SYRIZA's German sister party "Die Linke" projected an OXI on Schäuble's office last night.

btw, while all this Schäuble/Merkel nonsense is going on, there's a (in traditional terms) left majority in the German parliament and the main reason why it doesn't form the government is that the Social Democrats, the old traitors, refuse to go together with that very Die Linke ("the left") and prefer to carry water for Mutti. What a farce.

 

[angrysoba]

For a few seconds he reminded me of myself in 1989, during hyperinflation; one of those rare occasions you are punished with the ordeal of Sisyphus for other people's sins.

[qimg]http://i62.tinypic.com/123qk3a.jpg[/qimg]

Sorry, but I am not sure if I completely understand that.

I take it he is at the bank trying to get money out.

But the thing is that assuming he has money in the bank, it is in Euros is it not. Then surely the Euros will be worth as much as Euros anywhere else.

I guess if Greece is kicked out of the Eurozone and has to go back to the drachma and his money is revalued in the new/old currency then his savings may be wiped out by some instant devaluing, but that would then assume a "No" vote in the referendum.

If Greece stay in then how would hyperinflation happen?

I apologize if this is complete beginner questions as I have not really been paying enough attention.

 

[aleCcowaN]

Sorry, but I am not sure if I completely understand that.

I take it he is at the bank trying to get money out.

That 77 year-old pensioner was all day going to different banks in Thessalonica with his ill wife's id, savings book and all the necessary to get 120€ out of the system. After queues in three banks without cash, he was sent to a fourth bank, and he couldn't get any money either. The Associated Press photographer caught the moment he threw all the documents and let himself fall down on the floor in tears.

During the 1989 hyperinflation, one morning I had a 2-hour lesson to teach, I did it, I was paid the current rate, and then we started to think what were we going to lunch. We had found a tuna can in a corner inside one cabinet, so we joked "We're rich!". I said, let's eat rice with tuna, but we hadn't any rice, any eggs, any mayonnaise, also we were almost out of coffee. I went to the supermarket to buy those. I couldn't get our usual long-grain rice, but a cheap one, the kind not even the chickens should get; also they didn't have our usual brand of coffee and I bought 250 grams of the cheap brand available; they didn't have any Hellmann's so I had to buy a cheaper substitute, plus 6 surprisingly normal nice eggs. The ticket was almost exactly what I just had earned in two whole hours of work. I was going out of the supermarket when the cheap plastic bag I was given broke, all the content felt and the mayonnaise bottle and half the eggs broke. I went back home gloomy and tearful. Lunch was taken care but, what were we going to dine? About the same date in my block, a common man snatched a pizza from the hands of a delivery boy, pushed him and ran away crying in tears "I have to give some food to my kids". During the 2001 corralito, one of my neighbours, who had all his 238,000 dollars savings trapped the same way Greeks have theirs now, committed suicide. I still remember in both ocassions the number of dogs abandoned I saw. In 1989 during Winter 5 or 10 year old dogs with short hair, with their leashes attached to any post, a rag and a tiny pile of dog food left for them to survive. Dogs shivering with cold, with the saddest looks telling the whole world had crumbled over them, as they had been betrayed by their masters.

This photograph made me evoke old memories I had buried deep. I mean, we can discuss the crisis as an abstraction, but let's not forget the human dimension it contains.

 

[jaydeehess]

Do you realize that, during the last few years. the only loans Greece has gotten were just to pay older loans? And financing the social system with loans is not the way it works.

Again in personal terms, akin to making payments to one credit card from a different card.

Money was borrowed, payments became a problem. Does that then require the lender to simply forgive and forget?

As far as Greece not being officially, yet practically, bankrupt, what concrete difference does it make?

 

[jaydeehess]

But, let's make it clear that beyond the HUMONGOUS blunder of joining the Eurozone, the rest is all Greek doing. The Greeks were who vacated their banking system by taking 120/150 thousand millions out of it in a few years, plus perhaps 70 additional thousand millions of undeclared money. They made it unsustainable. There were no new loans to build homes, and construction is one of the most dynamic sectors in the economy -one that creates a lot of employment and one that flourishes or withers away very quickly-. There were no new loans for industrial corporations to modernize.

If you translate those figures into the United States, it's like 10 trillion dollars had fled the country during the last 5 years and the stock markets and public debt had lost other 15 trillion. What would its people think about it? What would it be the state of its economy today? I bet it would be way worse than today Greece's -because the Greeks are more adaptable as they are more used to this kind of crisis and have kinder institutions than the friendly kick_in_the_arse of foreclosure-.

And that is all high and mid-high class doing. And not because they are "oligarchs" or egotists and their money is to be distributed amongst the disenfranchised. Not at all! It's because the upper classes have responsibilities. The secret of capitalism is balancing those responsibilities with the egotistic interest of every individual. And it works. That's why other different systems depend on fear and obedience. Whatever step taken to oppose responsibilities to egotistic interest will make capitalism to shake, and by adopting the Euro and then spending as there is no tomorrow the Greeks built a coffin around themselves. Now they call for a referendum to discuss if the final nail is to be hammered or not. Too late.

Yes.
In similar fashion many middle class Americans contributed to the financial crisis of 2008. Mortgages in which one pays interest only in order to refinance later when the property has increased in value.
Sounds too good, and we know what is said about plans that sound too good to be true

 

[GlennB]

Money was borrowed, payments became a problem. Does that then require the lender to simply forgive and forget?

Require? No. But if the lender's loans are shown to have been geared purely towards the lender's interests while knowingly propelling the borrower to his doom then, well, the onlookers will make a suitable judgement.

Meanwhile, it seems somewhat likely Greece will vote YES today, placing the immediate fate of Greece (curiously ) in the tender hands of The Troika. Then, I strongly suspect, we'll soon see emergency liquidity pumped in and a rapid move towards debt restructuring as per the recent IMF report. If not, then it's austerity all the way as per Plan A and, again, judgement will be passed on the inevitable failure of that plan.

Oh - and if it's YES then there will be riots, but they'll pass.

 

[aleCcowaN]

A YES victory won't change the future much. If we take into account what is in offer according to the most recent comments from European big kahunas, the only changes to what I listed before is that there will be more cash assistance with capital restrictions remaining almost unchanged, though foreign trade operations will start again, but probably there will be needed some kind of authorization.

Capital will continue to flee as euro bank bills, into mattresses and as bank bills physically transferred out of the country. People will tackle any euro that may fall in their hands and subtract it from the ordinary course of business. As a consequence, tax evasion will rise abruptly: it's as simple as there won't be anybody catching euro bank bills but saying to the government "but this is for you". Everyone feels to be victim now. Cash transactions in tourism will be even most common and evasion will flourish.

As a consequence of all the measures, mainly drop in imports, the GDP will continue to fall sharply, but evasion will make the public deficit to sky-rocket, so Siriza will be blame for it, with the typical ruse of making the consequence a cause, that is, making the public deficit the cause of the stagnation and deal-breaking and not making the set of actions they are about to take the cause of the deficit.

Siriza may need to think eventually in introducing the IOUs, both for the country and them to survive.

There's a choice: throwing tons of fresh money into Greece; I mean tens of thousand of millions and doing it quickly. That will buy time and Greece will explode eventually anyway, but by then most probably different people will be in office throughout Europe, so the current culprits will go scot-free. I don't see these people doing this. They'll perhaps do something limited and somewhat late.

We face now a Europe of "averages" so they'll do something mid-way, and mid-way is the worst they could ever have chosen. It's either all the way Grexin or all the way Grexout.

I would love so much to be a 100% wrong, but I'm much afraid I'm partly right. I can't blow my head with a hammer and unlearn and unexperience what I did.

 

[Random]

Again in personal terms, akin to making payments to one credit card from a different card.

Money was borrowed, payments became a problem. Does that then require the lender to simply forgive and forget?

As far as Greece not being officially, yet practically, bankrupt, what concrete difference does it make?

On the other hand, at what point does a loan become so stupid that the lender should be expected to take a hit? Greece's finances were a mess long before the collapse, sustained only with outside investor money. Anyone who looked at the numbers could have told you it was going to come crashing down, but lots of lenders decided to jump on board long after people were ringing alarm bells.

 

[angrysoba]

That 77 year-old pensioner was all day going to different banks in Thessalonica with his ill wife's id, savings book and all the necessary to get 120€ out of the system. After queues in three banks without cash, he was sent to a fourth bank, and he couldn't get any money either. The Associated Press photographer caught the moment he threw all the documents and let himself fall down on the floor in tears.

During the 1989 hyperinflation, one morning I had a 2-hour lesson to teach, I did it, I was paid the current rate, and then we started to think what were we going to lunch. We had found a tuna can in a corner inside one cabinet, so we joked "We're rich!". I said, let's eat rice with tuna, but we hadn't any rice, any eggs, any mayonnaise, also we were almost out of coffee. I went to the supermarket to buy those. I couldn't get our usual long-grain rice, but a cheap one, the kind not even the chickens should get; also they didn't have our usual brand of coffee and I bought 250 grams of the cheap brand available; they didn't have any Hellmann's so I had to buy a cheaper substitute, plus 6 surprisingly normal nice eggs. The ticket was almost exactly what I just had earned in two whole hours of work. I was going out of the supermarket when the cheap plastic bag I was given broke, all the content felt and the mayonnaise bottle and half the eggs broke. I went back home gloomy and tearful. Lunch was taken care but, what were we going to dine? About the same date in my block, a common man snatched a pizza from the hands of a delivery boy, pushed him and ran away crying in tears "I have to give some food to my kids". During the 2001 corralito, one of my neighbours, who had all his 238,000 dollars savings trapped the same way Greeks have theirs now, committed suicide. I still remember in both ocassions the number of dogs abandoned I saw. In 1989 during Winter 5 or 10 year old dogs with short hair, with their leashes attached to any post, a rag and a tiny pile of dog food left for them to survive. Dogs shivering with cold, with the saddest looks telling the whole world had crumbled over them, as they had been betrayed by their masters.

This photograph made me evoke old memories I had buried deep. I mean, we can discuss the crisis as an abstraction, but let's not forget the human dimension it contains.

Wow! Thanks for the story. I just recently read something quite similar on Facebook about someone's experiences in Argentina. Your story is very similar in its details.

 

[GlennB]

An insight into the incoherent nature of the Troika approach, which happened very late in the 'negotiations':

"I have a question for Christine [Lagarde], Mr. Varoufakis said to the packed hall: Can the I.M.F. formally state in this meeting that this proposal we are being asked to sign will make the Greek debt sustainable?

Yanis has a point, Ms. Lagarde responded — the question of the debt needs to be addressed. (A spokesman for the fund later said that this was not an accurate description of the exchange.)

But before she could explain, she was interrupted by Mr. Dijsselbloem.

It’s a take it or leave it offer, Yanis, the Dutch official said, peering at him through rimless spectacles."

link at the NY Times

 

[aleCcowaN]

NO leading in all nomoí (ke san prota andriomeni, here, o here, eleftheriá!)

That doesn't mean the Soup Nazi is no going to say "No soup for you!" tomorrow.

 

[psionl0]

At the time of this post, the NO vote is running at 61%.

 

[Childlike Empress]

First reactions

 

[McHrozni]

Apparently I've overestimated Greek intelligence, the referenum looks a strong NO.

Banks are going to be bust come tuesday.

McHrozni

 

[aleCcowaN]

First reactions

On the contrary, I think the result -a good one, no doubt- free them from part of the apparent responsibility about what is coming.

Tuesday will be the same as if YES had won by a landslide: ELA with a dropper just to support basic imports; almost no fresh cash; ordinary course of businesses disrupted by lack of cash throughout the system; collapse of government revenue.

Europe will make it all a problem caused by Syriza and the Greek voters. Even those who knows how it works (like Hollande) will probably remain silent regarding addressing the real issue. European politicians will become "editorialists" and comment from the outside about the nonsensical current state of affairs.

Now it all depends on the ability of Syriza's leaders to realise where they are and take a quick course of actions to some fresh point in the future and not a longing of the past. I will say it in Argentinean: "No les veo uñas de guitarrero" (I don't see them having [the indispensable] finger nails to play the guitar)