Greek debt

[Khandro]

On December 31st 2006, the UK paid the final instalment of £45.5 million to the USA, thus discharging the last of its Word War II loans, some 50 years after contracting them. Why should the Greeks be let off from their debts so quickly and easily ?

[rojash]

In the first place, the Greeks are not being let of their debts, they are being offered more and longer loans which they will have to repay (in addition to interest).

The UK didn't have to pay its war loans. It could have chosen bankruptcy instead. Obviously, this would have been ludicrous for one on the richest nations, and would have resulted in a disastrous position for the UK. The Greeks could also choose bankruptcy (as can any country, corporate entity, or individual). The worry is that a Greek bankruptcy would be more disastrous for the rest of the world than it would be for Greece.

Thus any rescue plan proposed for Greece, is more in the interests of the rescuers than it is for Greece. And any refusal to help in the rescue of Greece is really a "cut off my nose to spite my face" response.

[rojash]

... incidentally, Britain's loan from the US was at a fixed interest rate of 2%, and repayments were suspended fro 6 years during times of economic crisis.
Greece's interest on the EU/IMF bailout is at 4.2%.

[Khandro]

" the Greeks are not being let of their debts, they are being offered more and longer loans which they will have to repay (in addition to interest)." Untrue, are you dreaming? how can such a small economy repay this debt other than over a very long period, according to the latest information, it appears the lending institutions (effectively us) are to forgo a loss of around 60%.

[emmie]

Khandro, they can't repay, not in a million years. Watch for more rioting in Greece, when the austerity measures really kick in.

[rojash]

"they can't repay, not in a million years"
You're absolutely right - but they have not been "let off their debt".
And an enormous part of their ongoing debt is made up of interest. I was merely pointing out facts, whereas Khandro appears to be grinding an axe. As I said, the UK took a payment holiday of 6 years on its debt to the US. What do you think would happen if Greece decided to do the same?

[emmie]

rojash, perhaps not, but consider if Britain had gone under, been conquered by Germany, and there was a possibility that could have happened, then America's position would have been difficult, as who would they have made alliances with, and as it turned out, with Americas help we lived to fight another day. And going on the information i have read, there are variables as to why that money was deferred, we were skint after all.

[rov1100]

I can't understand why they are still giving loans to a bankrupt country which they have no means of paying it back. Stretching out the repayment period just makes it worse.

If a person individually goes bankrupt his assets are confiscated and the debt is written off, they certainly don't lend him more money to get him into a greater debt.

They should allow Greece to go bankrupt and instead of them dishing out more money to them they should use the money to pay off the loans made by the European banks not via Greece by the way.

[Andyvon]

It's pointless throwing good money after bad. Greece should be allowed to return to the drachma and maybe take the consequences of going broke. Quite frankly, that's going to happen anyway.

It's becoming apparent that cutting jobs and spending really isn't the answer. Greece's main industry is tourism - she has no manufacturing or export base to speak of so she has nothing to pay back her debts with. 'Time' magazine made the analogy two weeks ago that if a mechanic sells his to pay current creditors then he has no hope of ever becoming solvent again.

I think the main reason this whole Greek crisis is continuing is because the EU leaders can't bring themselves to accept that the euro experiment has failed. There's no way back for Greece, Nicholas Sarkozy and Angela Merkel just can't admit it yet. Carry on throwing money at the problem then!

[Andyvon]

should have been "......if a mechanic sells his tools......" etc.

[rojash]

I agree Andyvon, the interests of the Greek people (and I mean the people as a whole, not the politicians and the very rich) would be served best by bankruptcy, and exit from the Euro.

The reason that the EU and IMF are propping up Greece, is not for the benefit of the Greeks, but for their own benefit and that of the German, French and UK banks that lent to them. The conditions imposed on Greece in return for the additional loans are such that the Greek economy has already been forced into a faster downward spiral. Each set of conditions imposed with each tranche of the "bail out" makes it even harder for Greece to do anything towards economic recovery, and consequently only deepens its debt whilst simultaneously making it less and less likely that it can repay it.

[rojash]

"And going on the information i have read, there are variables as to why that money was deferred, we were skint after all."

Exactly, the UK was skint and took a payment holiday, Greece is skint and could if it wished take a payment holiday simply by declaring bankruptcy. If it did, the rest of Europe (and eventually, probably the entire world) would suffer the consequences.

[starone]

Another thing that puzzles me in this situation is why are the people of Greece rioting. What earthly use is that , except to make things worse? Why don't they accept they have to do the same as the rest of the world and pull in their belts a notch. Do they think they are unique and have to be treated differently than anyone else? This of course applies to other countries who are rioting because of the economic situation, no just Greece. Mind you, if they were getting upset about the huge salaries etc the bank moguls get I can fully sympathise.

[Andyvon]

Rojash -

If Greece had a viable economic base that could be developed, then there would be a chance they could eventually become solvent. However, Greece has no industrial or manufacturing base, nor is it a centre for banking (!) or insurance.

As with a private individual who can't pay their debts and has no hope of ever doing so, Greece only has the option of declaring bankruptcy (defaulting etc). At least they would be sheltered from their creditors and the Greek people wouldn't keep seeing their wealth, lives and their childrens' futures draining away.

[Khandro]

We live in an age where all problems, fiscal and otherwise seem needed to be solved instantly. This short-termism is bound up with the ego-centred self importance of politicians. The Greek administration has led it's people into a dreadful state of affairs, the only immediately apparent solution appears that the rest of us pay to bail them out. I am suggesting that a longer view be taken; strict measures against further borrowing, and a much longer period set for resettlement of their debt. Rioting on the streets and failure to collect taxes is their problem, we should be sympathetic to the unfortunate Greek people, but they have, let's face it, been simply living beyond their means for too long.

[jake-the-peg]

Khandro - I suggest you start looking at numbers and facts - they really are very useful basis for opinions.

At the end of WWII the UK debt was nearly 250% our GDP - we paid that back as you have so helpfully pointed out

http://4.bp.blogspot....Umg/s400/debt-gdp.jpg

Greece's debt is currently 127% of GDP yet you tell us they can never pay it back.

So would you care to explain this - Are the Greek's less able than we Brits?

[Khandro]

" you tell us they can never pay it back." Where Jake, did I say that? I say in the short term, no, but perhaps with extreme austerity measures, albeit with an economic base bearing no comparison to that of Britain after WW2, there is a chance. They are most certainly less able than "We Brits"; when did you last buy a product marked 'Made in Greece'? Their main income came once from tourism, but this has been decimated since they entered the euro-zone, and they are left with feta cheese, raisins, olive oil, and a rather disgusting wine called retsina, to try to export.

[jake-the-peg]

Sorry Khandro - was late I mis-read your post for Em's!


I can't agree with Greece's tourism being dected after enteriing the Euro though - I was there myself this year

It's been quiet since the Financial crisis - not because they enterred the Euro.

I'm not an expert in Greece but from what I heard one of their biggest challenges is actually collecting tax revenue - it's seen as perfectly acceptable, infact laudable evade tax.

I was told that it's amazing how many boats suddenly relocate to fields up the mountains when tax inspectors come around.

I also disagree with your characterisation of the Greek economy.

You seem to have mysteriously neglected the huge Greek shipping industry - Aristotle Onasis etc?

Greece controls nearly a quarter of the worlds tankers for example.

I get the feeling though you have an agenda here - you, like a number here actually want to see the Euro fail because you want to see the EU fail.

Would I be right?

[DTCwordfan]

The World Bank would be happy to loan Greece the money it needs, if only the Greeks would work long enough to fill out the application form.

[seadogg]

Possibly this is the inevitable concomitant of the expansion of Europe from an elite group of rich nations and will happen again. You cannot compare the financial affairs of an individual with a nation, even if it has a small GDP.
Impressive comments btw.

[jake-the-peg]

Thank you DTcrosswordfan

A bit of humorous casual racism is always a helpful contribution

Perhaps you'd like to add that the Irish were to thick to fill in the form? - or is that a step too far