Greece crisis

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Greece crisis

Postby raja » Thu Jul 02, 2015 8:37 am

I don't know if we already have a thread on this but am opening this one now.
If we have one already, will merge the two.

This is about the Greece crisis, which now seems to have reached its climax.

Apparently a referendum is planned for 6th July, though I'm not sure it will happen at all. Or if it does, whether its outcome will matter at all.

Please share your thoughts on this topic here.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 8:53 am

Well well. I do not know if a thread has been dedicated for this but I have been following this and here are my impressions, possible scenarios that started it off and the eventual end. Of course what I think SHOULD be done by greece to help itself.

Part 1.

How did it all come about.

It was around 1995 when europe started getting a little jittery about the greenback. There were various currencies. the lira, the mark, pound, drachma (could be drachma I am bad at spelling and memory). ALL weaker than the $ and GBP. Some brainy one suggested, it would be better to form a "zone" that would be a union of sovereign nations. i.e they will be politically separate but currency for INTERNATIONAL trade would be one. i.e for local business it would still be their local currency.

Some one said too confusing (not sure if it was tested as such but) lets all merge as a economic entities. Our GDP will be LARGER. Everyone nodded BRILLIANT.. lets do it.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 8:57 am

But britain, as is usual practice, initially was in headlong but PULLED OUT. It refused to merge itself into the Euro (at a political level that is what happened). And so the others said F'u and merged their currencies.. SO france, germany, italy, etc etc. jumped into the band wagon and Greece too.. (turkey wanted to was denied denied and perhaps is having the last laugh now).

It actually was born in 1999ish at an ex rate of .1.6ish

Now.. that was the birth of euro.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 9:01 am

Now how does it affect greece.

Let us assume, I bump into Anil Ambani and some how me and him shake hands (nothing more). I go back. Anil is contesting elections. It is good for him to be seen with me a common man. But me when I am seen with others will be the richest person.. after all I "almost" have my hands in his (Anil ambani's) pocket. Suddenly every one wants to be friends.

Then I am seen with Mukesh Ambani. The feeling is reinforced. And now I am almost them personified.

Anil, mukesh and me, join hands for some purposes. The purpose is, Anil needs to be taught how to use twitter and mukesh needs similar service and so temporarily, I am not only a welcome guest into their homes but also a RESPECTED one!!

Now suddenly from nobody, I have become a big shot.. and I have done NOTHING to deserve that bigshotted-ness.

Do you see where I am going here? :D

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 9:04 am

Break.. I need to make this economic story interesting. Pai let me know your suggestions on twit.

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Re: Greece crisis

Postby raja » Thu Jul 02, 2015 9:20 am

Keep going. :-)

Btw, the idea of a common currency came up long before 1995. Francois Mitterand (French prez in the 80s) was a diehard fan of the idea. He arm-twisted Helmut Kohl (German chancellor) to agree to it by doing a quid pro quo. Kohl wanted German unification - Mitterand agreed to support him on this if Kohl would agree to a single currency. Maggie Thatcher, being Thatcher, was against both. :-)

Once France and Germany, the two biggies were in, the others just followed.

Not sure about other govts, but in the Netherlands there was no referendum at all. The govt just decided to go with it, though many Dutch folks were quite happy with the currency (guilder) they had.

The Dutch also got a somewhat raw deal with the exchange rate of guilder to euro.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 9:27 am

Agree but that idea was still born. It resurfaced in 1995ish however it was sort of set fizzing at the end of the first gulf war itself. Yaa.

Now here is the scenario.

Mukesh and Anil are welcoming me into their home and I am suddenly a big shot, everyone in my town knows me by face if not by name and wants to somehow at the very least be in good terms with me. Mean while, Ambanis to make it look appropriate to be seen with them, have "dressed me up" to walk the talk.

And I walk into a bank. I want a "home" loan..

Now let us examine two scenarios. SL before ambani and SL after ambani.

SL before ambani will be asked for salary slip, stand in que, fill out inordinate number of forms, wait for approval and make say about one visit a week to see what happened to my loan application etc.

Will the same happen to the new SL?

Hell no. All the banks will trip over each other they will give me a loan for not just a home but a housing project.. I was prehaps there for a 25 lakh loan but will come out with a 250 crore loan.. why? hell I am ambani's "CLOSE" friend.. err.. no wait.. I AM AMBANI!!!!

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 9:31 am

Now substitute SL with Greece and the ambanis with EURO biggies.. germany, france, belgium etc. So a puny country with 1/50th the GDP of EUROPE minus UK has suddenly the leverage POWER of entire EU zone.

Now I take the 250 crore loan and spend it with no care at all.. once a guy who used to get drunk in a deshi daru dukaan now is seen in five star hotels sipping the costliest of scotch and tipping waiters lavishly.. where will the eventual loan be paid?.. hell ambanis hai naa. Plus there is a LOAD of time.. you see, I have just taken the loan.. its not yet time to worry about repayments. Besides, someone else will be managing it in five or ten years time.. NOT ME!!! so it is an SEP.. i.e sombody elses problem. Not mine.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 3:27 pm

Now looks like no takers for this one. Anyway now that story has started, it has to be finished.

Now that is half of part 2 of how it affected greece. Now let us look at how greece contributed to this affect.

Now that ambani has dressed me up to walk the talk, it becomes my responsibility to carry that image. So now no matter what I do, I CANNOT be seen loitering in my striped lungi. Suit it has to be and all other thngs that go with a suit.. the silk expensive tie, the rayban glasses, may be a pipe in my mouth, shiny shoes bata (but bruno magli preferred).

Now imagine this. Ambani Ambani and SL have formed a group. Bill gates refused to join (understandably).

Now imagine this. There are two kinds of biscuits. One is the Marie biscuit (google) and the other is parle sixer biscuits (google it) the small hexagonal salt biscuits.

The overall amalgamation is one big marie biscuit and one of those sixers.

And the agreement is, whatever the return, it will be distributed proportionately to contribution. Now given their relative size, the dressing up will be EXPENSIVE for the sixer while something regular (i.e they do it anyways) for the Marie biscuit. Now once in, the "future" return is the lure.

The stage is set for our SL to dress up like a movie star no matter what he is doing.. may be digging his backyard to plant a tree but he has to be dressed appropriately mind you. And the returns (a percent part of investment) comes to him. i.e if he invested 100, he gets 15 back per year. So he is encourged to "invest" and extend himself more.

The small sixer biscuit is disappering fast but he believes the marie biscuit will step in to help.

Now meanwhile the marie biscuit or ambanis have realized their goals and therefore SL is of no consequence.

SL has extened himself in dubious loans and leveraged trades and is staring at a huge repayment.

What do we do?

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Re: Greece crisis

Postby Going South » Thu Jul 02, 2015 6:46 pm

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Re: Greece crisis

Postby raja » Thu Jul 02, 2015 7:21 pm

Continue, SL. :-)

Btw, I saw a detailed programme a couple of years ago on Dutch TV about the Greece crisis.

The programme suggested that Goldman Sachs had a big part to play in triggering (in fact, even creating) the crisis.

Apparently it has to do with speculation in financial markets and stuff.

You heard of this?

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 7:23 pm

I am not surprised. It has been done before. And that is where I threw in that BANK in my story with ambani :D

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 7:30 pm

See that is an entirely different side of the finance industry which we perhaps should not go into here.

Now as the story stands, SL has finished his term and has handed that fizzing time bomb to the next in line (perhaps).

Now.

He has the following to handle.

A unpayable debt. The money has either vanished or never really existed and is strict book keeping hankypanky but that is water under the bridge.. nothing much can be done about that really.

The debt is real.

AMBANI will not bail him out why should they and more often than not, they have a claim on his underwear.

So here are the options now the story of SL won't be good so lets get back to Greece.

1. Expect the creditors to forget the debt and write it off.
Now this brings in an entirely new and non regulated thing called obligation (which are again contracts but NOT really regulated by any particular body except courts).
2. Restructure the debt.
This brings in "easy" payable terms in the future but at a horrid rate or even disastrous one. Plus it yet again opens up the very leverage that created this mess in the first place. It would mean taking the sword away from one monkey and handing it another one.
3. Declare Bankrupcy and proceed.
THis is the ONLY viable solution. Why and how.

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Re: Greece crisis

Postby raja » Thu Jul 02, 2015 7:38 pm

Just typed "Goldman Sachs greece crisis" and see a whole lot of links.

I don't understand any of this but am sure you will. :-)

http://wallstreetonparade.com/2015/06/g ... ce-crisis/

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 7:48 pm

It would be a historical humiliating thing for a nation to go belly up and say well I am bending over..

But there is the catch.
1. Greece is a sovereign nation and it has as such some inalienable rights.
2. Greece is not a car/scooter/home that a bank/creditor can repossess.

i.e Neither its boundaries or its right to govern itself is anyway linked to the debt. Neither does any of that debt give anybody any right to infringe upon the personal property of the citizens.

Once they declare bankruptcy, next would be to send the debt and payment issues to an international arbitrator under the UN umbrella. (THIS IS IMPERATIVE. This is the only way to buy time and avoid strangulation).
Resurrect the drachma or its similar next gen currency.

The exchange rate for that currency will be HORRIBLE to start with given they are starting with red. But that has its advantages too. Exports from Greece will be attractive. Now they have agri and minerals and such as resources so.. but no oil except a oil field that is offshore but that is nothing much. They should open their infrastructure up for service industry like callcenters, helpcenters, datacenters, mobile telephony etc etc which will invite high tech firms there.

Initially any imports into Greece will be difficult unless UN sort of extends a relief package. That is more desirable than a banker or some such doing the "favour" because that banker will not just demand his pound of flesh later but much much more.

The first few years say up to 3 to five will be trouble times for the greeks. They will face problems but nothing insurmountable. As long as they keep their monetary policy and interest rates reasonably in line with say perhaps LIBOR, they will be ok. Any deviation/speculation/adventure there will be a straight road to hell setting off uncontrollable inflation/deflation and such.

Now in about a decade, with the forex inflow ($$) stabilized, they can start to shift their dependence purely on greenback and other reserve currency to bonds. BUT ONLY GOVT backed bonds (treasuries).

Once that has been done, all the rest will fall in place. Of course they must not get adventurous prematurely. They are at least 2 decades away from any such nonsense.

And as a priority.. i.e starting day before yesterday, settle all territorial issues with turkey even if it means bending over backwards. And ACCEPT turkeys assistance. You do not want a hyper neighbour frothing from his mouth sitting next to you when you are fighting fire in your home.

UN meanwhile would have either slept over the debt issue or decided it but in such a long term plan that it would become rather insignificant really in the long run.

But the road now is very bumpy with a car they are going to drive, with square wheels.

Now ask away.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 7:49 pm

raja wrote:Just typed "Goldman Sachs greece crisis" and see a whole lot of links.

I don't understand any of this but am sure you will. :-)

http://wallstreetonparade.com/2015/06/g ... ce-crisis/


Yup.. it almost happened with sonia's maaikaa before.. now with greece. It is same shit different day.

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Re: Greece crisis

Postby GpeL » Thu Jul 02, 2015 7:52 pm

The problem is these things are so bloody abstract in nature that explaining in lay man terms and general stories just does not make much sense. either the analogy becomes nonsensical or the crux is somehow lost. Even now I am not satisfied with what I have written. It is as accurate as possible under the constraints I have put myself into. But not the ENTIRE story. There are so many plots and sub plots that a correct understanding of all the debt instruments, the derivatives and the chains, and how $$ moves from one to another in the totem pole is a must. Not everyone has the time and patience to read that up or explain it in few pages. It is quite impossible.

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Greece crisis

Postby Going South » Thu Jul 02, 2015 8:09 pm

Selling a part of country esp islands in a global auction to private tycoons and Arab shieks is only viable option!

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Re: Greece crisis

Postby Going South » Thu Jul 02, 2015 9:59 pm

Greece's GDP is $250 Billion.
APPLE has $280 Billion of cash in its balancesheet!!!!

Should Apple buy Greece as a holiday home for its employees?

If Apple buys Greece, then Geeks and Greeks can stay together, and call it iGreece!!

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Re: Greece crisis

Postby GpeL » Fri Jul 03, 2015 4:54 am

IMF is suggesting route 2. i.e restructuring of loans and extending financing (read loan) to concessional financing through 2018 to "cover financing needs falling due on similar terms at least through 2018".

What that means is, they give loan to Greece so they can keep paying their EMI's or monthly loan dues ALREADY extended. Or financing an already financed (not same as remortgage where the first one is entirely paid off and only second remains.. here the loan is to help pay the first mortgage as it would happen regularly.. i.e taking it from your neighbor and paying off your monthly dues).. in other words, a single collateral (which is dubious in the first place) being used AGAIN as collateral. This is no different than a PONZI setup.

Why would IMF and EU push for this? Because a) It is their survival that is being threatened and also their authenticity. And b) THEY ARE THE PONZI operators in the first place i.e they initiated it.

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Re: Greece crisis

Postby raja » Fri Jul 03, 2015 9:49 am

Your suggestions make sense, SL.

I was also thinking along these lines. There will be tremendous short-term pain but in the longer run (over 20-30 years), Greece would hopefully be back on track. Of course that would depend a lot on the Greeks themselves and how they choose to learn from this crisis. (I have my own doubts about that, but I will let that rest for now).

I was suggesting restructuring yesterday as an option, but not in this way - that you add more debt to pay off earlier debt instalments. Indeed a ponzi-like situation.

For me, options are straightforward:
1) Greece gets out of Eurozone and runs its own destiny. To do this, it should get ALL reasonable support keeping in mind the depth of the current crisis. This isn't the time for creditors to claim their pound of flesh.

2) If Greece stays in Eurozone, it HAS to accept fiscal management from another headquarters. It has lost its right to run its affairs independently. This will certainly not be palatable to a sovereign state and will hurt Greek pride, but that's how it is. Better than begging on the streets.

Both these are STRUCTURAL solutions, with possible short-term pain but longer-term benefits.

Anything else is just massage. Postpone your headache from 2015 to 2016 or whatever. It will only get bigger, the longer you let it continue.

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Re: Greece crisis

Postby SuperGLS » Fri Jul 03, 2015 12:08 pm

Didn't I tell you guys that anything that has anything to do with the Mediterranean is worthless?

Can't another country just offer to "buy" Greece and then make it part of their own country?
Cook's #1 fan. @SuperGLS on Twitter.

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Re: Greece crisis

Postby GpeL » Fri Jul 03, 2015 12:55 pm

It won't be painless pai. It will be painful and will require sacrifices at a personal and political levels by the citizen (Who will be forced to) and the estabilishment (which will be reluctant to).

And that is the ONLY viable option I can see and I have scratched my unmentionables thinking about this for almost a week now. Not that I wanted to sacrifice my unmentionables (they are quite useless as they stand now pun accidental) but nevertheless, I love them more than greece. It was an academical mental master-baiting so to speak.

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Re: Greece crisis

Postby raja » Fri Jul 03, 2015 2:32 pm

Thanks, SL.

Let's see what happens. This has been going on for 5 years now, I just hope there is a solution soon. All this lingering is only making it worse.

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Re: Greece crisis

Postby GpeL » Fri Jul 03, 2015 2:40 pm

I can even tell you what WILL happen. he he.

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Re: Greece crisis

Postby GpeL » Fri Jul 03, 2015 4:55 pm

वक़्त की मार तो देख ऐ बन्दे।
दुनिया जीतने वाले सिकंदर का वतन दिवालिया हो गया ।


Not mine.

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Re: Greece crisis

Postby Going South » Fri Jul 03, 2015 10:17 pm

If u receive a call from a number starting with +30, pls don’t pick up the call.
Could be Greek Government calling to borrow some money.

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