Financial Crisis in Greece

[Phoenix]

Thread cleaned, this topic is not about Greek sporting events except rioting.

Thanks Daskalot.

[Soldier of Macedon]

It appears that this isn't the first time that Greece has lied about currency while in a common union with other countries. See the below:

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

The Latin Monetary Union (LMU) was a 19th century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver. It was established in 1865 and disbanded in 1927............

By a convention dated 23 December 1865, France, Belgium, Italy, and Switzerland formed the Latin Monetary Union and agreed to change their national currencies to a standard of 4.5 grams of silver or 0.290322 gram of gold (a ratio of 15.5 to 1) and make them freely interchangeable. The agreement came into force on 1 August 1866. The four nations were joined by Spain and Greece in 1868, and Romania, Bulgaria, Venezuela, Serbia, San Marino in 1889. In 1904, the Danish West Indies were also placed on this standard but did not join the Union itself. When Albania emerged from the Ottoman Empire as an independent nation in 1912, coins of the Latin Monetary Union from France, Italy, Greece, and Austria-Hungary began to circulate in place of the Ottoman lira. Albania did not however mint its own coins, or issue its own paper money until it adopted an independent monetary system in 1925..............

The LMU eventually failed for a number of reasons. Some members, notably the Papal State's treasurer, Giacomo Cardinal Antonelli, began to debase their currency. This meant he minted coins with an inadequate amount of silver and then exchanged them for coins from other countries that had been being minted correctly. More importantly, because new discoveries and better refining techniques increased the supply of silver, the fixed LMU exchange rate eventually overvalued silver relative to gold. German traders[citation needed], in particular, were known to bring silver to LMU countries, have it minted into coinage then exchanged those for gold coins at the discounted exchange rate. These destabilizing tactics eventually forced the LMU to convert to a pure gold standard for its currency (in 1878). Greece was ejected from the union in 1908, for decreasing the amount of gold in their coins..............

[makedonche]

SOM
Good find! I notice some repetitive behaviour over long time spans beginning to come to the surface, from Greece.

[Onur]

SOM, this an excellent find. It`s funny to see that Greeks was cheating 100 years ago too as they lied to the EU


Btw, it`s also interesting to see that in 1865, some people were trying to create some kind of European Union. I wouldn't be surprised if these people were the grandparents of Bilderberg group, who created and ruling in today`s EU.

[Soldier of Macedon]

There is a likely connection between the two, at least in terms of ideology. I just stumbled upon this information as I was researching the LMU. I wasn't too familiar with it until I saw a report on TV not long ago, and wasn't suprised to find that another former Greek government has 'fudged' financial figures to join a 'western' club. I haven't found anything else with regard to the above, although I haven't researched the history of the LMU that much.

[George S.]

Greece can’t be quarantined, so Europe will keep on giving it medicine

Greece can’t be quarantined, so Europe will keep on giving it medicine

19 July 2011, 2.18pm AEST

http://theconversation.edu.au:80/greece-cant-be-quarantined-so-europe-will-keep-on-giving-it-medicine-2377

As Margaret Thatcher’s trade minister in the 1980s, Norman Tebbit devoted much of his time to dealing with the European Community – the precursor to the European Union. Routinely, at meetings in Brussels, he would nudge his German counterpart and whisper, “Here come the Greeks looking for another handout”.

There will no doubt be similarly derisive comments uttered when EU financial officials meet in Brussels on Thursday to negotiate a second bailout deal for debt-laden Greece.

The genesis of Greece’s crisis has a long history. But the bottom line is that Greece is a member of the EU for purely political, not economic, reasons (so are Ireland, Spain and Portugal, for that matter, but that’s another story).

Greece’s accession to the union in 1981 was mired in Cold War and NATO politics. When Athens applied for membership in 1976, the European Commission was cautiously optimistic, but recommended a long gestation period to prepare Greece for European membership. But Paris and Bonn waved aside the Commission’s objections and fast-tracked Greece’s membership.

Fast forward two decades to 1999, when 11 EU countries jettisoned their national currencies and adopted the euro. Britain, Denmark and Sweden caused controversy by opting out of the eurozone. Greece, on the other hand, was auspicious due to its absence.

Almost 20 years as a net beneficiary of the EU’s general budget, and countless agricultural, regional and fiscal transfers had failed to transform the Greek economy or eliminate the drachma as the speculator’s currency of choice. Between 1990 and 2001 (when Greece finally adopted the euro), the drachma declined more than 50% against the US dollar.

The euro has done little better, depreciating 30% against the US dollar in 1999 to 2001. This did wonders for EU exports, but did little to alleviate dollar-denominated debt. The game changer was the 9/11 terrorist attacks and the subsequent wars in Afghanistan and Iraq, which reversed the trend and cause the euro to appreciate rapidly against the greenback.

Meanwhile, back in Athens, the Greek finance ministry, which had turned in a virtuoso performance fudging the figures to meet the EU’s stringent criteria for monetary union, switched its not-inconsiderable talents to understating the extent of Greece’s accelerating debt spiral. Which is when the IMF and EU stepped in back in 2010.

Now, let’s remember, the EU-IMF bailout is not for free – it’s a loan, and loans have strings attached. The problem is essentially political: the IMF wants more private sector involvement in eurobond purchases, but the EU doesn’t want its private banks to take on a significantly greater exposure to risk because national governments will be compelled to rescue domestic banks if they incur substantial losses.

Conversely, if the IMF extends additional loans to Greece, this transfers the majority of risk away from individual governments to the fund.

One idea floated recently is a partial debt buy-back scheme: greece could purchase its bonds back with financing from the European Financial Stability Facility (EFSF) and then reissue debt at a lower rate of interest upon maturity. The EFSF, created in 2010 as a consequence of the eurozone debt crisis, is effectively a ‘mini IMF’ reserve fund designed to deal with contingencies such as current account crises. An EFSF-assisted buy-back of Greek bonds could save Athens more than €20 billion.

Greece won’t default

Greece makes up a mere 2% of the EU’s US$16 trillion GDP. Its 350 billion euro debt is steep, but not insurmountable. These are, of course, gross liabilities – like a long-term mortgage, principal and interest payments need to be met regularly. The EU-IMF bailout consists of releasing funds progressively so Greece can meet its international debt obligations.

The Papandreou government has made the right decisions. It has introduced a wide-ranging austerity package, raised taxes, cut wages and started privatising state-owned enterprises. But as a consequence, Greece’s economic recovery will be protracted and painful.

Greek banks will need to merge with larger global partners, and Greece’s government enterprises will need to be thoroughly internationalised. European Central Bank board members and senior IMF officials are already canvassing these options publicly.

As in South Korea in 1997-98, Athens will need to engage in some fire-sale foreign direct investment. Indonesia faced similar problems in following the 1997 Asian financial crisis, enduring a painful IMF structural adjustment program. Now, Indonesia is the world’s third-fastest growing economy.

True, Greece isn’t Indonesia. It doesn’t live in the most dynamic economic region in the world. But it is a member of the world’s largest single market, and its partners – Germany and France – are determined not to let the decades-in-the-making eurozone collapse.

Most of Greece’s debt is owed to French and German banks. At worst, Greece will have a “selective default”, which means not all debts are serviced. Inevitably, this will result in rollovers and restructuring.

Greece will not default because neither Berlin nor Paris has an interest in letting this happen. The real question is how French and German banks get their money back. Inevitably, there will be debt restructuring and the banks will be forced to write off some of their loans. The chief political hurdle for German Chancellor Angela Merkel and French President Nicolas Sarkozy is how to pay for Greece’s burgeoning debts. If history is any guide, the Germans and the French will plunder the ESFS and ECB – that is, EU taxpayers’ funds – to do it.


A withering euro?

Analysts who should know better have been spreading far, uncertainty and dread about the EU and predicting the collapse of the eurozone. They are wrong on three counts.

First, disestablishing even a part of the eurozone, such cutting Greece loose and letting Athens switch back to the drachma, would require exceedingly complex legislation. Successive EU treaties have embedded the eurozone to such an extent that a member country cannot simply up and leave. Seasoned observers of EU affairs know how lengthy and protracted negotiations can be even with uncontroversial legislation.


Second, the euro is stable. Certainly, it is off its 2008 peak, but it’s still at over US$1.40, as the greenback remains persistently weak.

Third, both Athens and Brussels know that a return to the drachma would simply plunge Greece deeper into disaster. As Greek deputy prime minister Theodoros Pangalos remarked in June, resuscitating the drachma would display “immense stupidity’.

The euro currency didn’t create this crisis – Greece’s maladministration, financial laxity and fiscal indiscipline are creatures entirely of its own creation. The imprudence of French and German lenders is merely a symptom, not a cause, of Greece’s malaise.

When Greek officials and statisticians are economical with the truth, or baldly lie to the EU’s statistical agency, it’s worse than a crime it’s a mistake. Or, to put it succinctly, it’s financial fraud on an international scale.

Make no mistake: the Greek debt crisis is serious and EU taxpayers will be counting the costs for years to come. But Athens will pay a heavy price as well, not least in terms of its policy and fiscal autonomy. “The sovereignty of Greece will be massively limited”, Jean-Claude Juncker, the eurogroup chief, warned last week. High time too, Norman Tebbit would surely agree.
from r stefov article

[George S.]

The result of 20 years of corruption, tax evasion and ignoring reality

The result of 20 years of corruption, tax evasion and ignoring reality
Iason Athanasiadis:
Thursday, 30 June 2011

http://www.independent.co.uk/opinion...y-2304484.html

As school children in Athens, every year we practiced an alarming custom. At the end of the school year, we gathered our textbooks into a pile and burnt them in an act of rebellion against the rigidity of the educational system. Today, there is a parallel to that self-destructive behaviour in the blame-game unfolding on Constitution Square as Greeks curse their democratically elected politicians for "lulling" them into two decades of easy credit, soft corruption, tax evasion and overspending.

But they selectively ignore that they consented to an unwritten social pact whereby demonstrably corrupt politicians conjured up a higher level of living in return for no questions asked. But if people didn't know that Greece fiddled statistics to get into the European Union, then over-borrowed to fund the exaggerated lifestyles of corrupt politicians, many knew, perhaps only subconsciously, that foul play was afoot.

Now that the cat's out of the bag, many Greeks have opted for blaming the West for their travails instead of shouldering the blame. Global banks, the International Monetary Fund, Zionism and assorted scarecrows are infinitely preferable targets than facing up to our silent, corroding collusion. To kalo to palikari xerei allo monopati (the smart lad knows a better path) goes the Greek folk saying, and for years we fancied ourselves cutting fine figures as we negotiated our own special path.

But in dealing with Brussels we were falling foul of another saying: Logareiazei xoris ton xenodoho (acting without taking the innkeeper into account). Today, although some blame must be apportioned to international institutions for encouraging Greece's addiction to debt, almost no voices ask why Greeks knowingly lived beyond their means.

This refusal to deal with our past but rush to the soothing shelter of collective amnesia reminded me of the slightly bizarre experience of my Greek childhood. I grew up in Eighties Athens. I took for granted the embedded racism, clientilism and absence of meritocracy.

At sports events, the hooligans setting fires to the stadium, exploding fireworks into basketball arenas and pelting players with coins were described with quiet pride and a dash of admiration as "fanatics". Criminals often organized escapes from supposedly high-security jails. Demonstrators rioted in the streets on political anniversaries while the police stood by impassively. Only later did I learn that the authorities viewed the rioting as an important pressure valve on society necessary for manipulating the political agenda.

Then it got even better. Entry into the EU was interpreted as a signal to become "Western", ergo degenerate. Magazines featured scantily clad girls in suggestive poses as swaths of society plunged into a consumerist lifestyle unprecedented in Greek history.

When I moved to a school in London, I thought that all this and more was typical of every Western country and that Greek reality was normality. After all, raising your voice in protest at this paradigm resulted in getting shouted down as a xenerotos (pathetic) or floros (a dweeb). Now I spend some of my time in Kabul. In this failed state, with its massive corruption and a resurgent Taliban, it quite reminds me of home.

[Voltron]

The result of 20 years of corruption, tax evasion and ignoring reality
Iason Athanasiadis:
Thursday, 30 June 2011

http://www.independent.co.uk/opinion...y-2304484.html

As school children in Athens, every year we practiced an alarming custom. At the end of the school year, we gathered our textbooks into a pile and burnt them in an act of rebellion against the rigidity of the educational system. Today, there is a parallel to that self-destructive behaviour in the blame-game unfolding on Constitution Square as Greeks curse their democratically elected politicians for "lulling" them into two decades of easy credit, soft corruption, tax evasion and overspending.

But they selectively ignore that they consented to an unwritten social pact whereby demonstrably corrupt politicians conjured up a higher level of living in return for no questions asked. But if people didn't know that Greece fiddled statistics to get into the European Union, then over-borrowed to fund the exaggerated lifestyles of corrupt politicians, many knew, perhaps only subconsciously, that foul play was afoot.

Now that the cat's out of the bag, many Greeks have opted for blaming the West for their travails instead of shouldering the blame. Global banks, the International Monetary Fund, Zionism and assorted scarecrows are infinitely preferable targets than facing up to our silent, corroding collusion. To kalo to palikari xerei allo monopati (the smart lad knows a better path) goes the Greek folk saying, and for years we fancied ourselves cutting fine figures as we negotiated our own special path.

But in dealing with Brussels we were falling foul of another saying: Logareiazei xoris ton xenodoho (acting without taking the innkeeper into account). Today, although some blame must be apportioned to international institutions for encouraging Greece's addiction to debt, almost no voices ask why Greeks knowingly lived beyond their means.

This refusal to deal with our past but rush to the soothing shelter of collective amnesia reminded me of the slightly bizarre experience of my Greek childhood. I grew up in Eighties Athens. I took for granted the embedded racism, clientilism and absence of meritocracy.

At sports events, the hooligans setting fires to the stadium, exploding fireworks into basketball arenas and pelting players with coins were described with quiet pride and a dash of admiration as "fanatics". Criminals often organized escapes from supposedly high-security jails. Demonstrators rioted in the streets on political anniversaries while the police stood by impassively. Only later did I learn that the authorities viewed the rioting as an important pressure valve on society necessary for manipulating the political agenda.

Then it got even better. Entry into the EU was interpreted as a signal to become "Western", ergo degenerate. Magazines featured scantily clad girls in suggestive poses as swaths of society plunged into a consumerist lifestyle unprecedented in Greek history.

When I moved to a school in London, I thought that all this and more was typical of every Western country and that Greek reality was normality. After all, raising your voice in protest at this paradigm resulted in getting shouted down as a xenerotos (pathetic) or floros (a dweeb). Now I spend some of my time in Kabul. In this failed state, with its massive corruption and a resurgent Taliban, it quite reminds me of home.

Another "Progressive" Greek

Stay in Kabul dumbass, as of yesterday the US almost went under. And everybody over there pays taxes.

[El Bre]

Voltron,

Are you comparing Greece with the United States?

How many wars has the Greek taxpayer had to shoulder the burden for in the past 20 years?

The United States has a spending problem.

Greece has both a revenue and spending problem. Part of Greece's revenue difficulties stem from the fact that people don't pay their fair share in taxes.

I think a more apt comparison to Greece's current fiscal woes would be those of Argentina in the early 2000's. In Argentina tax evasion was a national sport.

[Voltron]

That doesnt negate the fact that the author is still a contempory dumbass.
Listen El Bre, of course the wars that America is involved in is a major factor, but America also has a huge industry, resources, R&D, etc. Taxing ppl is a copout that many countries use to justify their ulterior motives. How do you feel about Company Execs espescially Bank and Petroleum Executives handing multi-million dollar bonuses to themselves ? Hell, they make more money than some 3rd world countries but nobody says a word. They will divert the attention to other issues and ppl eat it up like no tommorrow. Taxing is not the cause of the problem. It is simple greed that is the problem. If I owe you 20 dollars but I dont have 20 dollars to pay you right now, what sense does it make to charge me 25 with interest when I dont have the initial 20 in the first place ? Wouldnt be more efficient to say, ok Il take the 20 you owe me in 6 months when you get it. However in 2-3 years time when you get yourself going economically I will ask you to may me the extra in interest for having me wait. Doesnt that make more sense ? Its common sense man, you dont need to be an economist to figure this out.

[George S.]

Voltron the sad fact is you guys can't face reality as it's going to bite you on the butt.People not going to pay taxes will spell ruin for the economy.You know it reminds me of president john f kennedy ask not what the country can do for you ask what you can do for the country.You hit the nail on the head it's greed that is killing greece.People wanting something for nothing.You can't have that.In australia the promise was every child should have a lap top for school.Now they realised that they can't afford itThe moment of realisation when it all hits home you simply cannot keep ripping the country off.You are effectively doing it to yourself.

[Zarni]

George the US never had any chance in hell doing the Greek it was all political infighting and a show front dont be so darn niave or just plain in denial

[Zarni]

This author probably owns real estate in Greece and is married to a Greek women he all but ignores the Greek character of the problem

[Risto the Great]

“The sovereignty of Greece will be massively limited”, Jean-Claude Juncker, the eurogroup chief, warned last week.

Wow, who would have thought such a thing was possible?

[Onur]

While Greek government busy with building fences and giant anti-tank ditches for the Turkish border, Turkish government decided to postpone Greece`s debt of 300 million dollars last week, for an unlimited time;

Turkey postpones pursuit of Greek debt in good will gesture
Ankara has postponed the pursuit of a Greek debt of around $300 million arising from a natural gas purchase from Turkey, as Turkey ruled out the suggestion that payment of the debt may be in the form of real estate as inappropriate.

Energy Minister Taner Yıldız stated that Turkey was not going to exercise its right to arbitration and will postpone recovery of the Greek debt until Greece gains financial stability, according to a report in the Vatan newspaper on Sunday. The minister ruled out the suggestion by international institutions that Greece could pay off its debt in the form of real estate, meaning the sale of Greek islands in the Aegean. Yıldız said such a move “would be taking advantage of a country, particularly a neighboring one, at a very difficult time.”

Yıldız suggested that relations between Turkey and Greece are beyond financial concern. He considered the Turkish move “an opportunity to erase the negative chapters in the history of relations between the two countries” and expressed the belief that both sides would make good use of the chance presented by Turkey.

Greece is reported to be in contact with Turkey's state-owned Turkish Pipeline Corporation (BOTAŞ) to make an arrangement for payment of the debt, which has been outstanding for 10 months now. The Turkish government waived its right to be compensated for the Greek debt in order not to further damage the neighboring country's economy, which is already strained with international loans. Greece is expected to outline a plan for payment and issue a statement of intention saying the country will make the payment in the future.

14 August 2011

BUT, while Turkey demands nothing from Greece, their so-called "EU brothers" asks for guarantees for the return of the debt. Finland asked for title deeds from Greece for their 1 billion euro loan. It`s been said that all the EU members will follow Finland and they will probably ask for Greek islands land registers for guarantees;

Finland Collateral Demands Threaten Bailout Solidarity
Countries seeking to imitate Finland's deal to receive collateral from Greece as a condition for participation in the European Financial Stability Facility risk disrupting plans for the single currency's bailout fund, the European Commission said Friday.

A spokesman for Olli Rehn, monetary commissioner of the European Union's executive arm, said countries must take care to avoid attaching too many strings to the revised bailout package. EU Commission President Jose Barroso recently wrote to euro-zone leaders, urging them to hurry up implementation of the package.

"It's up to euro-area member states to assess if this bilateral deal between Greece and Finland corresponds to [the] spirit of these conclusions and does not introduce any element that may be considered a distortion," the spokesman said. "We should avoid introducing too many new conditions, excessive collateralization, to have a rapid implementation of the decisions."

Financial markets are worried that the Greek bailout program, which faces a September deadline, could be delayed if too many other euro-zone countries sought copy-cat collateral deals before agreeing to participate.

"Now, other countries are deciding that they'd like some collateral too," said Nick Matthews, euro-zone economist at Royal Bank of Scotland. "When you've got financial markets that are already concerned, the last thing you want to be seeing is a suggestion that some elements of the program are being renegotiated."

Austrian Finance Minister Maria Fekter, who has repeatedly called on Greece to speed up its privatization plan, Thursday said she had asked her fellow euro-zone ministers to consider an alternative to the Finnish-Greek agreement.


Finland and Greece Tuesday announced a deal on collateral for the Nordic nation in exchange for its contribution to the EUR109 billion bailout for Greece agreed by European leaders on July 21. The deal has since drawn criticism from other euro-zone members such as Austria, The Netherlands, Slovakia, Slovenia and Estonia.

Finland's go-it-alone approach came at an awkward time--just as German Chancellor Angela Merkel and French President Nicolas Sarkozy were urging more economic coordination in the euro area. But Greek Finance Minister Evangelos Venizelos Friday defended the arrangement, noting it was foreseen at last month's summit.

"In line with the decision of the Council summit on July 21, we were obligated to hold bilateral negotiations with Finland to see if, on a bilateral level, we could satisfy Finland's demands, and without creating problems (for the bailout)," Venizelos said in a radio interview Friday.

AUGUST 19, 2011

http://online.wsj.com/article/BT-CO-...19-710333.html

I wonder what would Greek government do if Turkey would be in same position as they are now? I bet there would be widespread celebrations across Greece, big grin on the Greek politicians face. Some people would probably ask for title deeds in Izmir, Istanbul as a guarantee for debt amount.