Early results suggest that the Greek people have issued a resounding statement:  "No, you must continue sending us boatloads of money."  Yay?


Grim said...

This is one of those cases in which it is easy to doubt the wisdom of all sides. I suspect this is going to go badly no matter how it turns out, because the whole project was a bad idea to start with. The structure will bring a lot of force to bear on failure, and the near certainty of failure was built into the system.

Not only here, either, but in several similar economies in the EU. We're likely to see cascade failures until the whole system washes away. What that will do to global markets is, well, it's going to be a fun few years.

jaed said...

Is it "you must send us boatloads of money" or "no, we won't pay back what we borrowed"?

I confess I'm not as up on the Greece situation as I ought to be. My general impression is that all parties are frantically trying to wish away reality, but I'm not certain what that reality is.

Texan99 said...

No one has believed they would pay back the third of a trillion dollars they've already borrowed for, what, four years now at least? Since the last "haircut," anyway, when they agreed to "reforms." It wouldn't have mattered whether Greece voted "yes" or "no" for that purpose: they were never going to pay the money back. The issue was whether Germany would keep sending them more money after they ran out this weekend. For some reason, before the referendum, Germany was at least talking about being willing to send them additional boatloads of money, as long as Greece pretended to be willing to pay back some of the old money some day.

But with a "no" vote? As Legal Insurrection puts it, "Greece votes to keep living on Other People's Money; Other People disagree."

The Financial Times reports that Greece is already planning to confiscate a percentage of domestic bank accounts, as Cyprus did a few years ago. The Greek government furiously denies the report, but the FT hasn't retracted it.

Honestly, though, there's still a decent chance the EU powers that be will figure out another "extend and pretend" gambit that will stave off a German taxpayer revolt. There's apparently no end to the lies the taxpayers will swallow, even if it requires believing that Greece is repaying its debts while in fact the cash transfer continues to flow the other direction.

Grim said...

If they do that, they can say hello to bailouts in Portugal, Spain and Ireland at least.

MikeD said...

Exactly. Italy, Portugal, Spain and Ireland have been living under austerity measures to help stem the hemorrhaging of money their governments have been incurring as a show of good faith that they can get their spending under control and thus have a shot at actually repaying the debts they've incurred. The Greeks, on the other hand, have flat out said "no, not ONLY are we not going to pay you back for what we've already borrowed, but because you refuse to give us more money, you're creating a humanitarian crisis!"

The sad part is, the Eurocrats who cannot bear to accept that maybe, just maybe, this EU thing isn't the Utopia they imagined it to be are trying to wish away reality and somehow both keep Greece in the EU (and on the Euro) AND make the debt go away. But if they do manage to pressure the Germans into forgiving the debt (which I don't think they can do), they're first going to spark an anti-austerity revolution in Italy, Portgual, Spain and Ireland. Because why they hell should they have to pay back the Germans when the Greeks don't?

The second thing that will happen is that the Greeks will just piss away whatever money they're given AFTER the debt forgiveness, because they not only cannot pay it back, but you've shown them that they don't have to pay it back. And then (because they're doing absolutely nothing to address the fact that they are spending vastly more money than they're taking in) the Greeks will just keep coming back to the trough for even more money.

About the best thing that could happen for everyone involved would be for the Eu to unceremoniously boot the Greeks themselves and say, "after you have repaid your debt in full, we can talk about maybe inviting you back in," and of course, the Greek economy would implode (which it is going to do regardless of what the EU does) and they'd have to grow up and realize that they can't run a socialist utopia when there's no "other people's money" left to steal. Do I think that will happen? No. I honestly believe that the EU will cannibalize itself to avoid realizing that they were wrong, and it will collapse in a much worse financial disaster within the next 5 years. And it will be entirely of their own making.

Texan99 said...

First Greece will cannibalize itself: watch for the confiscation of domestic assets, which will allow them to put off for a few months, weeks, or days the acknowledgement that their economic assumptions are all rubbish.

MikeD said...

I'm saying I expect the heads of the EU to capitulate completely and just give the Greeks what they want to keep the whole damn thing going (assuming the Germans don't just tell them all "nicht mehr" and to go to hell). Oh sure, the Greeks MAY seize all private money, but we all know that's not going to "fix" a bloody thing, and may cause an honest-to-God citizen revolt. It's one thing to blame those meany-head Germans for demanding austerity. It's another to find your savings have been zeroed out by your own government.