The Argentina Solution For Greece

[camberiu]

BTW: I totally agree with you that the Euro is utter lunacy. The question is can it be reformulated to benefit people instead of big banks, and if not, how can countries get out with minimal damage.

The pain will be unavoidable. Any politician who claims that he/she can dissolve the Euro without pain, is a demagogue. The only solution is accept the pain and go through it. And the longer this is delayed, the more painful it will be.

 

[EdRooney]

I was in Athens last week and I follow the press quite closely. I have not heard anyone say that a Grexit would not be extremely painful.

 

[camberiu]

I was in Athens last week and I follow the press quite closely. I have not heard anyone say that a Grexit would not be extremely painful.

Never said they did. I said that anyone so happens to claim that is a liar. The only way to minimize the pain is to get out now. There are no other way that I can think of. The pain can only be delayed or transferred, but it can't be avoided. And the only way to minimize it is to exit sooner rather than later.

 

[camberiu]

Is China the next shoe to drop?


http://finance.yahoo.com/video/warnings-signs-china-could-near-122242456.html

 

[EdRooney]

OK I agree with you, but let me play devil's advocate a little?

Varoufakis and others have said that it is very easy to say "just take the pain" when you are not the one who will have to live the next 5 or 6 winters without fuel to heat your house or cook food. Any solution must be the best one possible for the Greek people. There are thus more or less three options:

1. Staying in the union and refusing to implement austerity, perhaps till the EuroGroup kicks them out (in which case I propose the George Costanza solution: just keep showing up to the meetings after you've been fired)​

2. Storming out of the union, in which case they would have to default, immediately nationalise the banks and implement draconian capital controls. In this case, it is entirely unclear what would happen legally to everything from private contracts in € to existing trade agreements. Millions of hours of work for lawyers.​

3. Planning a managed exit with the Troika, trying to squeeze as much liquidity and time out of the ECB to keep basic services running, pensions paid, humanitarian aid (very much needed), etc. Even this plan would take a matter of years according to most analysts.​

So which option would you prefer, or do you have a better idea?

 

[camberiu]

The only difference between 1 & 2 is timing. The pain will come and will come strong on either option. The difference is between now or when the Eurogroup kicks you out (or Germany choses to leave).

3) Does not make sense to me. What is in it for the debtors? Why would be ECB keep pumping liquidity into Greece? What is the trade off? Either there is a promise of repayment or there isn't. For any promise of repayment to have a minimum level of credibility, some austerity will have to be implemented. Politically it would be impossible for the Troika to keep pumping funds into Greece to keep services running without some austerity in place.

 

[Matt84]

Germany wanting Greece to become austere. That will never happen, the Griegos knows how to use the "Russian cards" cleverly.
First, the Griego has to get paid from the Germans for WW II damages done to them then bring in the Russos to build a base there.
At the end, Germany will pardon off existing debt and re-loan them more Euros..Clever, cunning, those Greeks...New con-game on the horizon, we all going to enjoy watching the game unfold...

So Greece's financial strategy consists of threatening the West to allow a Russian base in their territory (close to Akrotiri maybe?) if they are not subsidized to keep Northern European spending standards while enjoying a permanent Mediterranean climate?
Yeah, cunning indeed, reminds us that two of the richest men of the 20th century were Greeks.

Greece is poster child for the complete deconstruction of the Euro dream.

Greece is a cautionary tale about over-expansion of the EU on cultural rather than economic terms.
Greece has been counting as "Western" Europe in many statistics, etc., why? because of its rel. early EU membership.
Ever since the Schism of the Church (15 centuries ago?) Greece has marked the point where "Eastern" (Christendom) began. To the North the border might be less precise and more forgiving, but to the South it pretty much is without much room for exceptions (Trieste/Istria): The Adriatic Sea.

 

[EdRooney]

An orderly Grexit would prevent 2 things from happening, although the Troika does not seem to be interested in either of them.

#1: a disorderly Grexit (a Grexident?) will inevitably entail a very high cost for any European companies doing business in Greece and would most likely lead to a bigger haircut on Greek bonds with more drawn out payment times (remember, a default is not I will never pay, it's I won't pay everything now, cf Argentina). Not to mention all the legal battles that will drag out. Europe is in an econmic crisis and this could push it over the edge.

#2 is that a Grexit inevitably puts the next countries on the chopping block (Portugal, Italy, Spain) in much greater danger of following Greece out the door. This is an acute situation that Merkl et al seem to not be considering, but given the political situation in Spain (Podemos), Italy (Cinque Stelle) and even France with Le Pen's FP clearly leading polls, one would think they would be working toward keeping things together, not falling apart.

Between me you and the wall, none of these matter because the Troika seems much more intent on punishing Greece pour decourager les autres than thinking about the actual consequences of their brinksmanship. At the end of the day, however, you will have your wish and the Troika will destroy the EU "in order to save it".

 

[sleslie23]

Curious what the BAXpats School thinks about this:

http://economia.elpa...587_446898.html

 

[camberiu]

Curious what the BAXpats School thinks about this:

http://economia.elpa...587_446898.html

have been warning about this for years. I eve mentioned it when we had an BAExpat meeting with an Argentine economist back in 2012 (I think). He was very bullish about the future of Argentina, specifically because of the emergence of Brazil. And I told him that Brazil was standing on a very weak foundation and once it went, he could kiss Argentine exports bye-bye. And here we are.