Greek Default 2015 Poll

[specuvestor]

I have posted various times with disdain that IMF is a one trick pony with only Austerity in its belt. Frankly i really feel for the Greeks

But chaos for Iceland happened. The PM famously said that they should go back to fishing. And it's not going to be a consolation that chaos in Greece will be greater

Iceland was nearly 100% reliant on banking before the crisis, they had no real industry. Greece is different, take a look at the link that I posted (a few posts up), there is great evidence that Greece was competitive before they joined the EMU, growth in total production was very high.

Referring to your post http://www.valuebuddies.com/thread-6475-...#pid114628

Firstly Greece is not industrial focused so using that as a gauge may not be indicative; furthermore even if we use GDP we have to normalise the impact of housing sector to these economies. Secondly something monumental happened in Germany in 1990 that statistics dont remember

Thats why i am always skeptical about statistics unless we know what is behind those numbers. It's like trying to value a stock looking at the chart 10 years ago, irregardless of the corporate actions and changes

What is certain is Germany has been stronger vs the rest of the countries, whether it is due to inherent strength with a common currency denominator, or marginalising Eurozone is open to debate. I favor the former because the trade surplus of Germany intra-Eurozone is actually minimal.

If a country choose to focus on a weaker currency is like a company focus on stronger stock price. They are both barking up the wrong wall with short term bias. A weaker currency is actually marginalising the assets of the locals and subsidising the exporters. Mercantilistic policies looks good in short term but marginalises the general wealth of the population for example South Korea where wealth is focused on chaebols. Or our neighbours with perpetual weakening of currency over the long term.

Reserve currencies like USD is a different ball game which I had discussed in other threads and have different dynamics which the RMB is trying to muster.

[lilvestor]

I have posted various times with disdain that IMF is a one trick pony with only Austerity in its belt. Frankly i really feel for the Greeks

But chaos for Iceland happened. The PM famously said that they should go back to fishing. And it's not going to be a consolation that chaos in Greece will be greater

Iceland was nearly 100% reliant on banking before the crisis, they had no real industry. Greece is different, take a look at the link that I posted (a few posts up), there is great evidence that Greece was competitive before they joined the EMU, growth in total production was very high.

Referring to your post http://www.valuebuddies.com/thread-6475-...#pid114628

Firstly Greece is not industrial focused so using that as a gauge may not be indicative; furthermore even if we use GDP we have to normalise the impact of housing sector to these economies. Secondly something monumental happened in Germany in 1990 that statistics dont remember

Thats why i am always skeptical about statistics unless we know what is behind those numbers. It's like trying to value a stock looking at the chart 10 years ago, irregardless of the corporate actions and changes

What is certain is Germany has been stronger vs the rest of the countries, whether it is due to inherent strength with a common currency denominator, or marginalising Eurozone is open to debate. I favor the former because the trade surplus of Germany intra-Eurozone is actually minimal.

If a country choose to focus on a weaker currency is like a company focus on stronger stock price. They are both barking up the wrong wall with short term bias. A weaker currency is actually marginalising the assets of the locals and subsidising the exporters. Mercantilistic policies looks good in short term but marginalises the general wealth of the population for example South Korea where wealth is focused on chaebols. Or our neighbours with perpetual weakening of currency over the long term.

Reserve currencies like USD is a different ball game which I had discussed in other threads and have different dynamics which the RMB is trying to muster.

Those numbers include the service industries, its "total".

I favour the use of statistics because its the only available measure that is objective, and its quantitative so there can be no argument. In any case everything that we use to measure the strength of an economy e.g GDP, trade surplus, etc are all based on statistics.

I think wealth is always going to be concentrated in the hands of a few no matter what currency policy is favoured, this is the nature of Capitalism. I know of no country that favours a strong currency over a weak one, even USA, who holds the world's printing press, don't want a strong currency. Perpetual trade deficits cannot be a good thing since exports affect GDP growth too.

[lilvestor]

Yea Greece is actually more trade and tourism related. Guess what happens to these 2 when the economy goes into chaos

That said I've never seen or read a sovereign country "die" due to debt, not even Germany. Iceland came close.

A default doesn't necessarily mean chaos, Iceland did fine after they defaulted, tourist numbers nearly doubled after the crisis.

Contrary to what most people think, Greece actually has a very competitive services sector, the trade surplus on services exports account for over 10% of Greece's GDP, thats massive by any measure.

Greece should have defaulted 4 years ago, like Iceland, they would be doing fine now.

Oh it was chaos alright, for a few yrs after they defaulted.
Iceland underwent a severe economic depression between 2008-2010. 3 yrs of suffering, during which market cap of the Icelandic stock exchange fell by >90%. (!!!)
GDP dropped by 10%
Of course now they're on the mend and doing well.
that's the effect of default, u start afresh. But you've to go through some years of hell first.
Greece would go through arguably even darker days, and for a longer period too, because
1) Iceland wasn't part of and didn't get kicked out of Eurozone. Greece will be kicked out and the other finance ministers would almost be happy to do so!
2) Greece has to revert to the drachma. Icelandic kroon dropped severely too, but its different from having to abandon another currency and start printing yours again
3) Iceland had loans from the IMF after their default, to help them stabilise and support the value of the krono.
Greece.... nobody's going to support any drachma.

Sure, they'll be ok after several years.
But before that......
and the Greeks know it too. That's why they simply do not want to leave or get kicked out.
They just want their cake and eat it too. Oh, and they also want the German's cake and eat that too.

Only 3 years of suffering and a 10% drop in GDP? How is that even comparable to Greece's 25% cut in GDP and 7 years of suffering under the EMU? I think most Greeks would gladly take the former if they knew staying with the euro was going to do this to them, its obviously too late to regret it now.

7 painful years, all for naught.

Greece is currently experiencing a massive brain drain, the best and brightest are abandoning the country (mostly for Germany) because they see no future in the country, the same thing is also happening to Spain. This is what years of austerity has inflicted on the peripheral economies.

Oh for sure, nobody's doubting that the Greeks have suffered. The point I m making, which is prob an obvious point, is that after default, this 25% drop in gdp would look like its nothing. Things will get ugly, and for a number of years.
http://www.tradingeconomics.com/iceland/stock-market
This shows a chart of Iceland stock index. Crisis in 2008, if u look at the big picture, they still aren't even close to really recovering.
But of course, if u zoom into 2012-present, it looks much better.
Greece defaultingwill have to go through that same periodic wilderness, followed by a long slow recovery

On another note, austerity alone didn't CAUSE the Greeks to suffer.
IMO, there needs to be austerity AND business friendly policies. Sure, austerity was imposed. But the 2nd part of the equation was missing. The Greeks lack strong leadership who would do what's necessary. Things like labour law reforms, privatization of government controlled companies and lowering (with the aim of eventually scraping) generous pensions, retirement benefits etc

Or to view it from another angle: what's Singapore stance on all of these compared to Greece? It's totally opposite. And for good reasons too.

Back to the topic of this thread... My opinion is still that they won't default by the end of June though, and my investments are set up as such. If one genuinely has a strong conviction that Greece will default, then it's better to exit everything n hold cash cos it's hard to see how the subsequent contagion won't affect every market.

My point is that they missed the chance to default 7 years ago, they could have done that and they would be well on the way to recovery now. I doubt a default would have caused Greece's GDP to decline by more than 25% (Iceland's GDP "only" fell by 10%).

Well sure austerity alone didn't cause them to suffer, but it was the main reason. The math just doesn't work, the fact that Europe's economy is still in the doldrums after years of austerity while the US economy has more or less recovered (though not fully) is proof that austerity is a bad idea.

The Germans are slowly waking up to this, they must be or they wouldn't have agreed to QE, which in the bundesbank's own words amounts to fiscal sharing.

[specuvestor]

I have posted various times with disdain that IMF is a one trick pony with only Austerity in its belt. Frankly i really feel for the Greeks

But chaos for Iceland happened. The PM famously said that they should go back to fishing. And it's not going to be a consolation that chaos in Greece will be greater

Iceland was nearly 100% reliant on banking before the crisis, they had no real industry. Greece is different, take a look at the link that I posted (a few posts up), there is great evidence that Greece was competitive before they joined the EMU, growth in total production was very high.

Referring to your post http://www.valuebuddies.com/thread-6475-...#pid114628

Firstly Greece is not industrial focused so using that as a gauge may not be indicative; furthermore even if we use GDP we have to normalise the impact of housing sector to these economies. Secondly something monumental happened in Germany in 1990 that statistics dont remember

Thats why i am always skeptical about statistics unless we know what is behind those numbers. It's like trying to value a stock looking at the chart 10 years ago, irregardless of the corporate actions and changes

What is certain is Germany has been stronger vs the rest of the countries, whether it is due to inherent strength with a common currency denominator, or marginalising Eurozone is open to debate. I favor the former because the trade surplus of Germany intra-Eurozone is actually minimal.

If a country choose to focus on a weaker currency is like a company focus on stronger stock price. They are both barking up the wrong wall with short term bias. A weaker currency is actually marginalising the assets of the locals and subsidising the exporters. Mercantilistic policies looks good in short term but marginalises the general wealth of the population for example South Korea where wealth is focused on chaebols. Or our neighbours with perpetual weakening of currency over the long term.

Reserve currencies like USD is a different ball game which I had discussed in other threads and have different dynamics which the RMB is trying to muster.

Those numbers include the service industries, its "total".

I favour the use of statistics because its the only available measure that is objective, and its quantitative so there can be no argument. In any case everything that we use to measure the strength of an economy e.g GDP, trade surplus, etc are all based on statistics.

I think wealth is always going to be concentrated in the hands of a few no matter what currency policy is favoured, this is the nature of Capitalism. I know of no country that favours a strong currency over a weak one, even USA, who holds the world's printing press, don't want a strong currency. Perpetual trade deficits cannot be a good thing since exports affect GDP growth too.

Can you send a link to show where total industry production includes service sector?

Quantitative is not unbiased and also leads to argument. Take a simple CPI for example and search internet. Statistics are only useful when one understands whats behind it. Otherwise it's just numbers trying to look smart

Check the very savvy ex US treasurer Robert Rubin that says strong dollar is in the best interest of the US. Also look no further that the wealth of Singapore being one of highest globally per capita is a result of strong SGD

[CCUV]

My last 2c take

Germany don't want Greece out of euro,as it might affect the strength of the euro currency,hurt export and jobs.

Greece also don't want to be out of euro,as it is the only way of getting money from rich eu nations and secondly even if they are out of euro arrangement, monies and every single cent still have to be pay back to imf and eu,there will be no way they can run away with the debt, they can't tap the international market for borrow unless they pay the monies owe to those institution.

[lilvestor]

Yet another call for Greece to leave the EMU.

What If Greece Just Disappeared?

By Leonid Bershidsky

In David Mitchell's novel "Number9Dream," a patient who says he created the world proves his point to a psychiatrist by making Belgium disappear from maps (where it is suddenly called Walloon Lagoon) and from people's memories. It's worth considering what would happen if Greece suddenly disappeared from our radars.

One morning we'd wake up and find no Greek news on our website of choice, no links to Greek stories on Twitter, no mention of Greece in European Union documents or Eurostat reports. A look at the map would reveal a country called Hellas still jutting into the Mediterranean to the south of Bulgaria, Macedonia and Albania. It would be just another Balkan country.

Greek central bank governor Yannis Stournaras warned today that no deal with creditors would probably mean default, then exit from the euro, and then, "most likely," from the European Union. That, he said, would be painful. In fact, any pain would be of the phantom variety, coming in the form of regrets and dashed hopes. Economically, Stournaras's nightmare scenario wouldn't be terrible for anyone.

Related: Greece Default Watch

As Tim Edwards, senior director at S&P Dow Jones Indices, pointed out recently, "If Greek equities, Greek bonds and Greek GDP disappeared, it would certainly be a tragedy, but not of epic and globally destructive proportions." That's because the combined free-float capitalization of the Greek stock market -- at about 19 billion euros ($21 billion) -- is just 0.2 percent of the EU equity market, Greece's GDP is 1.5 that of the EU's and its exports and imports hover about 1 percent of the EU volume.

There is, of course, the debt -- 324 billion euros. But very little of that is liquid or market-based:

Most of the money is owed to European governments. If Greece defaults on those debts, there will, of course, be political repercussions -- but no one will go broke. No European state will be unable to balance its budget because of missing Greek interest payments, which have already been deferred by 10 years and would in any case be linked to the European Financial Stability Facility's minuscule funding costs. As for the principal of the loans, it could simply be treated as sunk cost: The EU has done its bit to keep Greece, but what to do if the attempt has failed? As for the remaining private lenders, they have known their risk for a long time and won't go belly up, either.

If EU member Greece just disappeared and re-emerged as Hellas, a newly non-EU state, leaving its debt behind, it would be just like the countries that emerged from the Soviet Union's breakup. They, too, had clean slates, because Russia assumed responsibility for their debts. There was a lot of purely psychological fallout, of course, including a fallen-empire complex for many Russians and a reallocation of trust in the markets. Yet the EU is probably better able to handle this than was Russia in the early 1990s: It is much stronger economically and more enlightened about how the world works. By getting rid of Greece, the EU would also send a message to current and aspiring members that it's got some standards.

Greece, too, would be better equipped for continuing its journey alone. What Prime Minister Alexis Tsipras calls "catastrophic policies" imposed by his country's creditors have helped build a good base for growth. Zsolt Darvas of Bruegel, the Brussels-based think tank, says that Greece's labor market is now more flexible than the German one and that the adjustments in unit labor cost and ease of doing business have made the country potentially more competitive. Besides, the tradable sector (including agriculture, manufacturing, transport and tourism) now makes up a bigger share of the Greek economy than of the German one. It's the non-tradable sectors, particularly construction and finance, that have been dragging Greece down.

A post-default Hellas could attempt to fix all of this with a currency devaluation and bank nationalization, the way Iceland did -- to plaudits from everyone, including the International Monetary Fund.

Darvas writes that the growth implied by the structural changes in the Greek economy would be conditional on a comprehensive agreement with the creditors. I find it hard to see what the absence of such an agreement would change. Of course, Hellas would find it hard to finance itself by raising credit, but it could only benefit from more self-reliance: Governments would be forced to be more fiscally responsible, unless "friends" such as Russian President Vladimir Putin prove over-eager in providing financial assistance, which I doubt Russia can afford.

In any case, plenty of European countries survive outside the euro area and the EU. There is no reason why Greece shouldn't do the same. Getting rid of its debt burden may well be worth it.

[lilvestor]

I have posted various times with disdain that IMF is a one trick pony with only Austerity in its belt. Frankly i really feel for the Greeks

But chaos for Iceland happened. The PM famously said that they should go back to fishing. And it's not going to be a consolation that chaos in Greece will be greater

Iceland was nearly 100% reliant on banking before the crisis, they had no real industry. Greece is different, take a look at the link that I posted (a few posts up), there is great evidence that Greece was competitive before they joined the EMU, growth in total production was very high.

Referring to your post http://www.valuebuddies.com/thread-6475-...#pid114628

Firstly Greece is not industrial focused so using that as a gauge may not be indicative; furthermore even if we use GDP we have to normalise the impact of housing sector to these economies. Secondly something monumental happened in Germany in 1990 that statistics dont remember

Thats why i am always skeptical about statistics unless we know what is behind those numbers. It's like trying to value a stock looking at the chart 10 years ago, irregardless of the corporate actions and changes

What is certain is Germany has been stronger vs the rest of the countries, whether it is due to inherent strength with a common currency denominator, or marginalising Eurozone is open to debate. I favor the former because the trade surplus of Germany intra-Eurozone is actually minimal.

If a country choose to focus on a weaker currency is like a company focus on stronger stock price. They are both barking up the wrong wall with short term bias. A weaker currency is actually marginalising the assets of the locals and subsidising the exporters. Mercantilistic policies looks good in short term but marginalises the general wealth of the population for example South Korea where wealth is focused on chaebols. Or our neighbours with perpetual weakening of currency over the long term.

Reserve currencies like USD is a different ball game which I had discussed in other threads and have different dynamics which the RMB is trying to muster.

Those numbers include the service industries, its "total".

I favour the use of statistics because its the only available measure that is objective, and its quantitative so there can be no argument. In any case everything that we use to measure the strength of an economy e.g GDP, trade surplus, etc are all based on statistics.

I think wealth is always going to be concentrated in the hands of a few no matter what currency policy is favoured, this is the nature of Capitalism. I know of no country that favours a strong currency over a weak one, even USA, who holds the world's printing press, don't want a strong currency. Perpetual trade deficits cannot be a good thing since exports affect GDP growth too.

Can you send a link to show where total industry production includes service sector?

Quantitative is not unbiased and also leads to argument. Take a simple CPI for example and search internet. Statistics are only useful when one understands whats behind it. Otherwise it's just numbers trying to look smart

Check the very savvy ex US treasurer Robert Rubin that says strong dollar is in the best interest of the US. Also look no further that the wealth of Singapore being one of highest globally per capita is a result of strong SGD

I'm not trying to be rude but if you think anecdotal evidence is superior to quantitative data then there honestly isn't much scope for discussion isn't it? I mean most research/analysis is done with quantitative data...

Lets just agree to disagree.

[specuvestor]

Thats not what I said i said statistics and data are useful (and they are important) only when we understand what is behind those numbers. Like i always say 1000-999 and 2-1 both have same conclusion.

I have dealt with data all the time and data mining can practically support what you want to prove. So the trick is to understand the wider context.

And lastly yes data have to fit observations in the real world. Current dogma seems to think maths or statistics or for that matter financial reporting reflect the real world. When actually the real scientific method demands that theory has to fit observation. Thats the part that most people (in general) dont understand how science progresses. It doesn't progress on numbers. Hard science like engineering understands that, palaeontology for example doesn't

[CityFarmer]

I am not sure the Greece will get what they wanted, but I am sure the PM and Finance minister are part of a great negotiator team...

Greece can give ground but no more pension cuts -negotiator

ATHENS (June 17): Greece is willing to make concessions to strike a deal with creditors as long as it is "economically viable", but will not cut its existing pensions, a top Greek negotiator told Reuters on Wednesday.

The comments by Euclid Tsakalotos were the clearest sign since the collapse of talks at the weekend that Greece still has room to offer some ground to lenders despite its hardline rhetoric against their demands.

Athens could accept a deal only if it was sustainable and addressed debt, financing and investment issues, said Tsakalotos, the coordinator of the Greek negotiating team.

"If you have that, then the Greek government will sign the deal," Tsakalotos said. "If it doesn't have that kind of deal there is no point in signing onto something that you know is going to fail."

The comments by Tsakalotos - who took a prominent role in the talks with European and IMF lenders in April after Finance Minister Yanis Varoufakis was sidelined - come amid growing fears that cash-strapped Greece is on track to a default at the end of the month that paves the way for a euro exit.

He dismissed talks of "Grexit" by European partners as a form of pressure in the talks but confirmed Athens did not have money as of now to pay a 1.6 billion euro payment due to the IMF on June 30 without a deal with creditors to unlock frozen aid.

"At the moment we haven't got the money," he said, adding that Athens was already "squeezing every last bit of drop of liquidity" to service debt so far.

"There is no financing, we haven't got access to the markets, we haven't got money that hasn't been paid since the summer of 2014 so obviously we won't be able to have the money to pay that."
...
http://www.theedgemarkets.com/sg/node/209939

[BlueKelah]

Just to update this thread,

as the negotiations will be ending soon and the month of june is almost up, most buddies have voted to a default with 14 : 9 vote.

What an exciting end to 1H 2015