Debt crisis: Greece closes banks; Sensex, global markets crash

[anant_s]

The question is...
Could ECB made a QE with oil-barrel in 100 USD? I think no.

ECB can print money now without generate inflation because low oil barrel prices.

If oil-exporters countries want to increase oil barrel prices they should print a trillion of fake 500 EUR banknotes and give it to greeks with free air-flights from greece to eurozone to spend that fake money (as fake money is the official money that ECB prints with its QE).
That it will increase oil barrel prices.

Yeah, I know it, it's a crazy idea.

But a really insane, crazy and evil idea is make a war and kill innocent people to increase oil barrel prices.
And that is what planning to do right now some brainless and evil goverments, like Russian gov and Iran gov. [HASHTAG]#IranTalks[/HASHTAG]

Well now it is in interest if EU that talks on Nuclear issue with Iran succeed as it will guarantee low crude prices vital for Euro's stability. I think with Obama is last lap of his presidency, he would want to leave some positive legacy and want some sort of lasting solution with Iran and it will good overall for all oil importing nations. This leaves OPEC ie if they will resort to production cuts.
Its a nice cat and mouse game, lets see if ECB allows Greece to go its own way.
I was also thinking had Russia been in a better position economically, it would have gestured and encouraged Greece to leave EU. I'm waiting to see what move Putin would make next?

 

[ArsalanKhan21]

Greece has declared bankruptcy five times since its independence in 1830. The Greeks are lazy, haughty and proud people who believes that the deserve free money since they produced ancient Hellenic culture. Anybody who loans money to Greece is never going to get it back. The Greeks in Greece are lazy and want to retire at 45 with full pension paid by European Union while the Greeks living outside Greece are hardworking and entrepreneurial people.It is about time for Grexit.

 

[M.SAAD]

Ohh thanks for the replies guys, I kinda understand it now ..!!

 

[Donatello]

Let's look at some of the key contributors to the Greek crisis, and see which country is responsible for each:

1) In 2002, Greece entered into a huge currency swap with Goldman Sachs to hide its debt. This helped Greece to dupe fellow Eurozone members and lenders, allowing it to continue borrowing recklessly. The deal was expensive, both in terms of fees and in terms of payments Greece is obligated to make as the swaps expire in 2012 through 2017.

2)Greece's successive governments have refused to make labor and market reforms that could allow faster growth. (Greece's Reforms Have Only Cracked the Surface)

3)Greece has low tax receipts due to widespread tax evasion, which a 2009 OECD estimate placed at €20 billion of unpaid taxes per year. Consider that Greece's debt is just a bit over €300 billion. An extra €20 billion (if not frittered away by the government) would have avoided the debt crisis altogether. (Tax evasion and corruption in Greece)

How was Greece able to do a currency swap with a private bank without the ECB and European Union knowing what its own member was doing?

 

[Emilly David]

How was Greece able to do a currency swap with a private bank without the ECB and European Union knowing what its own member was doing?

Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives.At some point Greece had to pay up for its swap transactions, and that impacted its deficit. This is where they got caught. The bond maturities range between 10 and 15 years. Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.

For your information Italy also tried the same thing with one of the US bank but they were not able to break out the deal.

 

[ArsalanKhan21]

Greeks are stubborn people who believe that retiring at age 45 with full benefits including a pension is human rights issue. Greeks believe that EU should continue to pay all their bills since 5,000 years ago ancient Greeks created the first civilization in Europe. They will rather sink the European Union than cut their god given right to full pensions paid the EU taxpayers.

 

[Donatello]

Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives.At some point Greece had to pay up for its swap transactions, and that impacted its deficit. This is where they got caught. The bond maturities range between 10 and 15 years. Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.

For your information Italy also tried the same thing with one of the US bank but they were not able to break out the deal.

I know how bonds work, somewhat, but my question is, even if it was a couple of billion dollars more than Greek was supposed to have, how did Greece rack up so much debt and never payed?
Any creditor will lend you the money as long as they know you can pay......if EU and Eurozone couldn't keep an eye on what Greek banks and government were doing, they then lose the right to ask Greece back for money.
What do you think is the solution? Greece will exit the eurozone?

 

[Emilly David]

I know how bonds work, somewhat, but my question is, even if it was a couple of billion dollars more than Greek was supposed to have, how did Greece rack up so much debt and never payed?
Any creditor will lend you the money as long as they know you can pay......if EU and Eurozone couldn't keep an eye on what Greek banks and government were doing, they then lose the right to ask Greece back for money.
What do you think is the solution? Greece will exit the eurozone?

Since 1998 or 99, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009 (or 2010), it exploded to over 12 percent.

Greece could not have borrowed this much money had the markets and other EU members not been so foolish. People did not think Greece would default because it had the implicit guarantee of the EU. So, interest rates were really, really low and Greece was able to binge on debt and kick the can down the road. I agree that You can't be a bad debtor without unwise lenders.

I think Greece should exit Eurozone. As long as the government doesn't blow it, far from causing increased misery or depression, a devaluation, an exit from the euro, can bring the economic equivalent of salvation. The key thing about sustainability is income. If Greece could recover its previous level of income, then the primary surplus would soar way beyond the numbers that are trying to be imposed upon it, and similarly, the debt-to-GDP ratios would plunge. The key to all this is getting economic growth. If you get that at a decent level, this problem will be solved but they don't seem eager to do it.

 

[Nicky G]

The Greece situation is a heady blend of many 'bad' practices.

Greeks with their leftist policies of exorbitant pensions and benefits; there is so only so much people will let you borrow without demanding action that protects their repayment.

Banking jugllery such as CDS only hides the problem for a while, not solve them as GS snake charmers might have advertised to ill-informed Greek politicians.

Any union that forces countries with intrinsically different economic outlook into a monetary union, such as Germany is Greece is going to fail. Being in Euro means Greece can't simply devalue their currency.

Now, the only options are severe austerity, default and eventually exiting the Euro zone. Countries with exposure to Greek debt are trying to protect their investments by any means possible, but its a futile exercise in the long run. This is going to be a continuous drama every six months, before Greece eventually leaves zone.

 

[Audio]

If you wanna hear an anecdote, my grandpa was pretty high up in the CP of Yugoslavia, and he told me even in his days (70's, 80's) there was a saying "in debt like Greece".

You wanna hear something even funnier? Largest shipping fleet in the world (yes, Greek) is taxed minimally and receives hefty subsidies throughout it's existence. Needless to say, they didn't even feel the crisis and have increased their profits since the start of it.

 

[Donatello]

Since 1998 or 99, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009 (or 2010), it exploded to over 12 percent.

Greece could not have borrowed this much money had the markets and other EU members not been so foolish. People did not think Greece would default because it had the implicit guarantee of the EU. So, interest rates were really, really low and Greece was able to binge on debt and kick the can down the road. I agree that You can't be a bad debtor without unwise lenders.

I think Greece should exit Eurozone. As long as the government doesn't blow it, far from causing increased misery or depression, a devaluation, an exit from the euro, can bring the economic equivalent of salvation. The key thing about sustainability is income. If Greece could recover its previous level of income, then the primary surplus would soar way beyond the numbers that are trying to be imposed upon it, and similarly, the debt-to-GDP ratios would plunge. The key to all this is getting economic growth. If you get that at a decent level, this problem will be solved but they don't seem eager to do it.

Interesting, but how can Greece generate income? Businesses are shut and no one wants to invest in Greece....plus it never really had any industrial capability. So how are they going to deal with this?

Where do you work/live? Introduce yourself in the members section, hoping for good discussions from you on this forum.

 

[Economic superpower]

Vote NO

 

[Matrixx]

what other countries are near to Greece situation.....

 

[Styx]

Grexit polls @ 20% show 60:40 for no

 

[Nicky G]

Early results show 'No' vote with strong lead in Greek referendum - The Times of India

EU in trouble, China slowing. Interesting times ahead. Looks like India will be the bright spot in global economy.

Grexit polls @ 20% show 60:40 for no

I thought no exit polls were conducted.

Anyway, the markets will collapse if its a no. Thank God I took my money out.