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posted by martyb on Monday July 06 2015, @08:57AM   Printer-friendly
from the getting-what-you-asked-for-may-not-be-getting-what-you-want dept.

The Greeks voted no to the European Union's terms, despite warnings from the EU that rejecting new austerity terms would set their country on a path out of the Eurozone. 62% voted "No" while 38% voted "Yes".


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  • (Score: 5, Interesting) by Anonymous Coward on Monday July 06 2015, @09:25AM

    by Anonymous Coward on Monday July 06 2015, @09:25AM (#205530)

    I think it's necessary that once in a while banks and organizations like the IMF fall flat on their face. A loan is a risky investment, and if Greece can't pay it's the IMF's problem. (Greece'll have other issues ofcourse) I think this is needed to keep the banks on their toes with their activities and that they all don't just jump on the high risk investments. Besides on that scale of money, the only thing that changes is some digits in some computing systems, i.e. move the 1.5 Billion from one column in a spreadsheet to another.

    Alternatively; if Greece were a corporation, there also wouldn't be any problem. Just transfer all valuable assets to a new corporation: 'new Greece'; and let the old one go bankrupt. From there continue as normal.
    Its strange that we accept that behaviour from corporations (who damage quite some civilian lives in such a process) without question, but when a government wants to do it to improve the lives if its people, it's all turmoil.

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  • (Score: 5, Informative) by moondrake on Monday July 06 2015, @11:04AM

    by moondrake (2658) on Monday July 06 2015, @11:04AM (#205556)

    IMF? Not really. Or not so important in any case. Most of the loans to Greece came from other EU countries (nearly 200 billion). I.e. these are not banks who have to deal with it, its taxpayers.

    Your metaphor completely misses the point. Taxpayers are going to make a big turmoil of things if the money is not coming back. Some newsoutlets are calculating this into €500-€1000 per taxpayer. This is a bit unrealistic (amongst other things, it does not account for the possible benefits that having Greece in the union may have brought. For example, it kept the value of the euro down allowing for bigger profits on exports). Nevertheless, at some point it is worth to keep funding a country that fails to restructure its finances.

    You may see people clamoring for booting Greece from the Eurozone. This is silly. There are no treaties concerning a country's exit from the Eurozone. Nobody in the EU can legally remove Greece other than by a revision of the treaties, which would require Greece to agree. Greece can only voluntarily exit the union (and even that is not trivial).

    This is partially why you see such insistence within the EU to keep looking for solutions. As there are not really many alternatives.

    • (Score: 4, Interesting) by theluggage on Monday July 06 2015, @12:23PM

      by theluggage (1797) on Monday July 06 2015, @12:23PM (#205588)

      Nobody in the EU can legally remove Greece other than by a revision of the treaties

      Complete failure of the Greek banking system could leave the government with no choice but to start printing IOUs "new Drachmas" to allow Greeks to eat food and sleep indoors. No treaty needed.

      • (Score: 2) by moondrake on Monday July 06 2015, @01:07PM

        by moondrake (2658) on Monday July 06 2015, @01:07PM (#205601)

        Correct. They could do this, but as I said, its their decision, not the EUs decision (I was arguing against the idea that they could somehow be booted out). But if they did, it would not be really leaving the monetary union, just be a stop-gap measure that allows a local economy. These notes will devaluate quickly and nobody outside Greece would accept them. After a year, the people may realize their 100000000 drachma pension is worth far less then the current proposed cuts. Although it might actually improve the economy somewhat in the longer term, I am not sure the headaches of a double economy is worth it.

        Interestingly, they could avoid this by printing euros instead, as they probably have the equipment. This would create quite a bit more turmoil as it would amount to basically counterfeiting on a national scale.

        • (Score: 1, Insightful) by Anonymous Coward on Monday July 06 2015, @01:15PM

          by Anonymous Coward on Monday July 06 2015, @01:15PM (#205607)

          They are in blatant and willful violation of fundamental contracts of the Eurozone, and the other Euro countries could dismiss these contracts for cause, which would remove any rights out of these contracts from Greece and thus effectively remove Greece from the Eurozone. Nobody could stop Greece from using the Euro as their national currency, but that's not why they want to stay in the Eurozone.

          • (Score: 2) by moondrake on Monday July 06 2015, @02:58PM

            by moondrake (2658) on Monday July 06 2015, @02:58PM (#205648)

            My point was they cannot dismiss anything. There is simply no legal basis for doing so. They can stop providing money, but they cannot actually remove Greece from the eurozone.
            But fair enough, I did not provide sources, so your assertion is as good as mine. Therefore, if you got time (its lengthy) read: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1517760 [ssrn.com]

            Failure to honor the contract, as you mention, may have consequences, such as the suspension of some rights under the treaty (like Council voting rights). But expulsion from the union is simply not part of that.

            The only legal way to indirectly remove Greece is to convince Greece to voluntarily leave the union.

            Its seems you are hinting at "effectively" removing Greece (and "why they want to stay"). I am not sure what that means though. Sure, we can stop providing money for their banks. But as long as they are in the eurozone, their economy (luckily small) will matter for the rest of the eurozone. What's more, Greece may actually try to legally challenge the fact that they are cut off from support. I am not sure how that would pan out, but it is not at done deal for the rest of Europe (they do have some rights, even although they are in "willful violation" as you put it).

            • (Score: 0) by Anonymous Coward on Monday July 06 2015, @03:50PM

              by Anonymous Coward on Monday July 06 2015, @03:50PM (#205682)

              The objections against the possibility of expulsion focus on the lack of applicable provisions in the treaties. That's not what "dismiss for cause" is about. There are no contracts that cannot be undone even if it is no longer reasonable that one party abide by the contract in the face of violations by the other side. If the contract specifies remedies in case of violations, then certainly these remedies must either have been applied or be deemed unreasonable in the face of intolerable violations. The mere fact that the EMU treaties don't specify conditions and procedures for a dissolution of the treaty however does not mean that all parties to the treaties are forever bound by it, no matter how flagrant other parties violate it.

              It is actually less likely that Greece can legally decide to exit the EMU on its own, because there are no provisions for that, and unlike the rest of the Eurozone, Greece can not claim that the other side flagrantly and intolerably violated the treaty it wants to leave. On the other hand, nobody is going to go to war over Greece leaving the EMU, so effectively they can leave if they want to. That's politics: If enough people agree, anything is possible.

              • (Score: 2) by moondrake on Tuesday July 07 2015, @11:01AM

                by moondrake (2658) on Tuesday July 07 2015, @11:01AM (#206070)

                I think you misunderstand the basis on the contracts that gave rise to the EU. It can be more or less described as a voluntary collaboration. Nobody rules, all are equal (well, formally at least). Provisions for violations are usually focused at helping the country to comply, not putting them into a position where they no longer have to comply. Its a fundamental different philosophy. Use of force is inconceivable within this framework. Its a little bit like raising young children. If they fail to honor their contract, you (are supposed to) try again.

                If any nation, or group of nations, would impede on another countries right (they have rights under the treaty), it would spell the end of the EU as an institution.
                You may also misjudge the willingness of countries to agree with such an action, as its sets a precedent (and they may be next).

                But you do not have to take my word for it, just look at the news today of all countries stressing they want to keep Greece in (and even retracting pre-referendum statements). All of that talk is what I would call politics (politics is not about agreeing imho). I predict that there will be a deal, watered down in the eyes of many EU taxpayers, but sold as the best possible solution. An unilateral expulsion is simply not going to happen. They will probably work out some special status for Greece.

                About leaving on its own: There are provisions for exiting the EU, and, it can be argued, by extension the EMU. But I think its unlikely for them to do that.

                • (Score: 0) by Anonymous Coward on Tuesday July 07 2015, @11:42AM

                  by Anonymous Coward on Tuesday July 07 2015, @11:42AM (#206076)

                  I didn't say it's desirable, just that it's possible. The Eurozone can not perpetually tolerate an unwilling member being in flagrant violation of the treaties. Expulsion by law or by coercion is a possibility, whether Greece or anyone else likes it or not. Consider the situation: Seeing the "success" of Syriza's referendum, Podemos will try the same in Spain (election later this year) and Hollande will want less pressure on France (election in 2017). Italy already has a left-leaning government and is looking for an opportunity to relax the pressure on its finances as well. So it's open season on all fiscally responsible countries, but mostly on Germany due to its size and current economic power. This is not going to work. Germany can not bail out Greece, Spain, France and Italy. The tensions will tear the EU apart.

                  What are the options? a) Greece stops its tantrum, abides by the rules, reforms its state apparatus and becomes a good European citizen. The other countries take note and don't try anything funny themselves. b) Greece does not come to its senses, the Eurogroup does not give in, and Greece exits. The other countries take note and don't try anything funny themselves. c) Greece gets away with it, the Eurogroup grants a haircut and agrees to more money for empty promises, open season on Germany, EU breaks apart, everybody loses.

                  Option c isn't acceptable, so a haircut is not an option and neither is more money without reforms (not just promises of reforms). So it's option a or b. How likely do you hold option a? That leaves b, Grexit. If it has to be possible, it is possible.

                • (Score: 2) by cafebabe on Saturday July 18 2015, @08:43AM

                  by cafebabe (894) on Saturday July 18 2015, @08:43AM (#210721) Journal

                  They will probably work out some special status for Greece.

                  Currency union without full political union never works. Regardless, from the present situation, a viable solution might be a currency union for the Southern European tourist economies of Portugal, Spain, Italy and Greece. However, even that may only delay revolution or war.

                  --
                  1702845791×2
        • (Score: 2) by theluggage on Monday July 06 2015, @02:14PM

          by theluggage (1797) on Monday July 06 2015, @02:14PM (#205629)

          Correct. They could do this, but as I said, its their decision, not the EUs decision

          Its a decision that the EU could force upon Greece by pulling the plug on the Greek banks' life support. Greece could then "decide" between reverting to a barter economy, declaring the leaf as the unit of currency or printing IOUs new currency (easier to regulate and less seasonal than leaves).

          Also, so say a critical mass of EU politicians decide to chuck Greece out of the Euro. OK, so its against the treaty, but who ya gonna call? The Euro wouldn't have got started if the EU had actually followed their own rules on the entry conditions.

          But if they did, it would not be really leaving the monetary union

          That's probably how the Germans would spin it, yes...

          • (Score: 2) by moondrake on Monday July 06 2015, @03:06PM

            by moondrake (2658) on Monday July 06 2015, @03:06PM (#205651)

            >Also, so say a critical mass of EU politicians decide to chuck Greece out of the Euro. OK, so its against the treaty, but who ya gonna call?

            There are courts in Europe. And they will probably act. Apart from that, blatantly disregarding their own treaty is not going to do wonders for the already mediocre EU reputation. Disregarding court orders would be enough to simply forget about the EU everywhere. I think its not a reasonable way for the EU to go.

            Interestingly, printing (or picking) and using an alternative currency is, under the EMU treaty, illegal. But in this case, I do not think Greece politicians would care overly much.

            An interesting opinion I read a couple of days ago is that the EU could claim Greece was actually never legally part of it (as they cheated to pass the requirements many years ago). Even although this is true, courts generally do not fall for such beautiful arguments though.

          • (Score: 2) by mojo chan on Tuesday July 07 2015, @10:33AM

            by mojo chan (266) on Tuesday July 07 2015, @10:33AM (#206056)

            Like any lender, the EU doesn't want Greece to default or switch to another currency or do anything that will result in its debts being written off. If Greek banks collapse then other EU countries will have to pay out to their citizens to compensate them (in the UK the scheme protects you up to £75k per bank). There are all sorts of very negative consequences, so they will try hard to find a deal that doesn't screw themselves.

            --
            const int one = 65536; (Silvermoon, Texture.cs)
        • (Score: 0) by Anonymous Coward on Monday July 06 2015, @02:22PM

          by Anonymous Coward on Monday July 06 2015, @02:22PM (#205630)

          Greece has the equipment to print 10 EUR notes and mint the Greek variants of the coins. Other denominations are printed in other countries. Printing money without the ECB's permission would be dealt with swiftly.

        • (Score: 0) by Anonymous Coward on Monday July 06 2015, @08:21PM

          by Anonymous Coward on Monday July 06 2015, @08:21PM (#205820)

          The obvious is that everybody else leaves together.

          Better yet, first rename the old currency to "Greeko" or similar, then leave and create a new Euro.

          The traditional way is simply war. It's been done numerous times throughout history. Drop the arrogant "this time is different" and realize that all parts of the world are destined for repeated wars. They might as well start one while they have a good reason.

          Europe can form a new nation w/o Greece. This was treason when the USA was formed, both ditching the king and again later when the constitution was signed, but that didn't stop anybody. It can work for Europe too.

          Europe can declare an emergency, convict Greek politicians of crimes, and send in German or French commandos to arrest/kill the politicians.

    • (Score: 1) by jalopezp on Monday July 06 2015, @04:21PM

      by jalopezp (2996) on Monday July 06 2015, @04:21PM (#205712)

      Yeah, the opinion that Greece needs to exit the Euro is because this is seen as a Balance of Payments crisis. Here the resolution would be to devalue the local currency, which would allow prices in the economy to readjust. Income would drop, and the GDP would shrink even on top of the ~20% that has been lost in the last few years, but eventually prices bottom out, Greek goods and services become attractive again and unemployment would start to fall.

      Anyway, I agree that this should not be considered the only option, the current account deficit is not the only problem in Greece and even if it were, currency depreciation is not the only way to resolve it. Greece might just be offered a new deal on softer terms.

    • (Score: 5, Insightful) by threedigits on Monday July 06 2015, @05:03PM

      by threedigits (607) on Monday July 06 2015, @05:03PM (#205729)

      Most of the loans to Greece came from other EU countries (nearly 200 billion)

      This is technically true, but it's hardly the whole truth. Before the bailouts it was private banks that held most of the debt, specially French, German and Greek ones. All those were "rescued" by the EU taxpayers (by forcing Greece to take more loans). A big share of these "emergency" funds went *directly* from the EU to the banks, never to Athens. I find it obscene that there's plenty of money to rescue bankers, but not a dime for Greek people.

      • (Score: 3, Insightful) by frojack on Monday July 06 2015, @11:42PM

        by frojack (1554) Subscriber Badge on Monday July 06 2015, @11:42PM (#205896) Journal

        I find it obscene that there's plenty of money to rescue bankers, but not a dime for Greek people.

        This.

        Many of these loans were debt traps, pure and simple, and when it became obvious that Greece could not pay, they looked for someone else to pay, because the banks were "too big to fail". (Hmmm, sounds familiar).

        If the EU is in fact a union, then the union has some obligation for the predatory behavior of the lenders. If its just a bunch of bullies on the play ground pushing around the kid in shabby trousers, then why call it a union. Because it sounds like a mob.

        Australia, Canada, the US, hell, even India have measures to take care of states/provinces that can not possibly pay their entire way.
        Some states get massive amounts of national funds, far in excess of their tax revenue. Other states pay in more taxes than they get back.

        The EU seems to be treating its member states like the old Soviet Union. Some states server only as buffer states to protect the homeland.
        Its looking more and more like Greece was just a wrapper around the Bosnia/Serbia/Albania problem.

        Its all good to talk of contracts and bailouts, and technical details of the mountains of paper constructing the EU. But at the end of the day, Greece has a balance of payments problem, and NOTHING other than selling off antiquities gets past that. Is that what the EU really wants?

        --
        No, you are mistaken. I've always had this sig.
        • (Score: 3, Insightful) by Joe Desertrat on Tuesday July 07 2015, @02:10AM

          by Joe Desertrat (2454) on Tuesday July 07 2015, @02:10AM (#205959)

          Its all good to talk of contracts and bailouts, and technical details of the mountains of paper constructing the EU. But at the end of the day, Greece has a balance of payments problem, and NOTHING other than selling off antiquities gets past that. Is that what the EU really wants?

          It is not what the EU wants, it is what the banks and other moneyed interests want. Whenever you hear the term "austerity" in regards to government, behind it is an attempt to transfer public assets into private hands.

        • (Score: 2) by cafebabe on Saturday July 18 2015, @09:15AM

          by cafebabe (894) on Saturday July 18 2015, @09:15AM (#210729) Journal

          Some states server only as buffer states to protect the homeland.

          This happens intentionally or not but it has been driver which makes peripheral countries favorable towards expansion because it makes another country into a buffer zone. Unfortunately for Spain, Italy and Greece, the Mediterranean Sea forms a fairly definitive buffer between Europe and Africa. Furthermore, as an island nation, Greece has many routes to smuggle people. The more able people diffuse further into Europe. However, one of the relatively overlooked problems in Greece is the disproportionate accumulation of undocumented, low-skill immigrants who don't integrate into the local culture.

          --
          1702845791×2
      • (Score: 2) by mojo chan on Tuesday July 07 2015, @10:36AM

        by mojo chan (266) on Tuesday July 07 2015, @10:36AM (#206057)

        A big share of these "emergency" funds went *directly* from the EU to the banks, never to Athens. I find it obscene that there's plenty of money to rescue bankers, but not a dime for Greek people.

        You misunderstand what was happening. The Greek banks were bailing out the government, lending it money. The EU was then bailing out the Greek banks by the same amount. The legal framework that meant it had to be done that way is complex, but basically it was just a way to funnel money to the Greek government and not the banks themselves. The money was only given on the condition that it was lent to the government.

        --
        const int one = 65536; (Silvermoon, Texture.cs)
    • (Score: 2) by jmorris on Monday July 06 2015, @05:46PM

      by jmorris (4844) on Monday July 06 2015, @05:46PM (#205756)

      There are no treaties concerning a country's exit from the Eurozone.

      Because the EU was designed as a roach motel. But it was designed by socialists and is thus failing instead of fulfilling the original design goal of Germany conquering Europe without a shot fired.

      In the end, pieces of paper aren't reality. Reality says Greece is now in a no win scenario and whatever happens next they lose. Remember that the EU is currently two different yet related things, the political union and the monetary one. Greece will be leaving the monetary union, of that there can no longer be much doubt. But it is just a different world of pain outside the Euro. This farce drug on so long and caused so much pain because both sides kept pretending there was a third way, one where Greece could remain a socialist basket case AND remain in the Euro. Finally the voters were allowed to break the deadlock and pick the form of Gozer the Destructor. Can't really criticize their choice too harshly, it was the ones leading up to it that is worthy of scorn.

      • (Score: 5, Touché) by urza9814 on Monday July 06 2015, @06:19PM

        by urza9814 (3954) on Monday July 06 2015, @06:19PM (#205772) Journal

        Because the EU was designed as a roach motel. But it was designed by socialists and is thus failing instead of fulfilling the original design goal of Germany conquering Europe without a shot fired.

        If it was designed by socialists they would have given Greece *money*, not *loans*...

    • (Score: 2) by tangomargarine on Monday July 06 2015, @07:36PM

      by tangomargarine (667) on Monday July 06 2015, @07:36PM (#205803)

      So basically you're saying that Greece can do anything they want and the rest of the EU's only choice is to throw up their hands and say, "We can't kick them out!"

      It there is no exit clause in these treaties, somebody fucked up big.

      --
      "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
      • (Score: 2) by moondrake on Tuesday July 07 2015, @07:57AM

        by moondrake (2658) on Tuesday July 07 2015, @07:57AM (#206025)

        Well, to be fair, there are many ways to make someones life annoying even without legal means.

        As for the fucking up, you can read the link I provided. They actually debated such a clause, but it was abandoned several times for various reasons (I think most important is that some countries get uneasy by other countries having the power to remove them from the union). Anyone know how this is for the US. Can a state be unilaterally expulsed?

        • (Score: 2) by penguinoid on Tuesday July 07 2015, @09:24AM

          by penguinoid (5331) on Tuesday July 07 2015, @09:24AM (#206045)

          Anyone know how this is for the US. Can a state be unilaterally expulsed?

          Dunno about expulsion, but any state or group of states can legally secede.

          --
          RIP Slashdot. Killed by greedy bastards.
          • (Score: 0) by Anonymous Coward on Tuesday July 07 2015, @02:42PM

            by Anonymous Coward on Tuesday July 07 2015, @02:42PM (#206125)

            there was a war a while back because some states actually tried secceeding, they got their asses kicked

          • (Score: 2) by tangomargarine on Tuesday July 07 2015, @02:57PM

            by tangomargarine (667) on Tuesday July 07 2015, @02:57PM (#206131)

            One would think so. But a lot of people in the U.S. apparently feel differently.

            --
            "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
  • (Score: 5, Insightful) by VLM on Monday July 06 2015, @11:31AM

    by VLM (445) Subscriber Badge on Monday July 06 2015, @11:31AM (#205567)

    I think it's necessary that once in a while banks and organizations like the IMF fall flat on their face

    The merger of .com and .gov would like to disagree with that. Its a game of chicken, the German banks knew those loans were as dumb as making subprime loans at the bubble peak in Arizona BUT they get steep commissions and they own their governments, so sure their puppets will bail them out with tax revenue, just like the American bankers recently did.

    You'd need an euro governmental revolution outside Greece to fix this, then Greece can be fixed.

    • (Score: 3, Informative) by jalopezp on Monday July 06 2015, @03:43PM

      by jalopezp (2996) on Monday July 06 2015, @03:43PM (#205672)

      Is this comment from 2010? American banks were bailed out in 2008, and Greece doesn't owe any money to any banks. Greece did owe money to banks five years ago, when it first risked default. It was since bailed out twice and was able to pay the banks back. So now, instead of owing money to the German (and French) banks, Greece owes money to the IMF, the ECB and the European Comission. That bailout came with very severe conditions that were meant to allow Greece to pay back their debt in a timely manner, but these conditions turned out to be so draconian that the Greek GDP has shrank by 20%, which ironically means that Greece definitely cannot pay those loans back.

      So now that you're caught up on the events and we can agree that corporations are not playing anymore, we can talk about a Greek default. Loaning money is a risky proposition, and sometimes it is so risky that no one is willing to do it. In a high risk environment increasing the interest rate can balance out the risk of default, but if the interest rate goes high enough that itself makes it less likely that the debt will be paid. This is the position Greece is in, and it still needs to borrow more money to pay pensioners and public workers. In this situation, governments have a 'Lender of Last Resort', the IMF, who is willing to lend you money despite the risk, and to do so, gets extraordinary powers to collect. What it means here is that you cannot default to the IMF, if you could, the IMF would never get its money back from anyone. America, who provides most of the IMF funds, and the rest of Europe will make sure that the IMF gets paid even in case of default, even if it takes 100 years.

      So no, banks won't be bailed out, those guys cut their losses years ago. But yes, the IMF will be paid, and definitely with tax money because there is no other way.

  • (Score: 1) by nitehawk214 on Monday July 06 2015, @04:11PM

    by nitehawk214 (1304) on Monday July 06 2015, @04:11PM (#205701)

    That's a fantastic way to throw away blame for debt. "I can't pay back my loans? Well that's the bank's problem, I will just walk away."

    No wonder nobody is responsible anymore.

    --
    "Don't you ever miss the days when you used to be nostalgic?" -Loiosh
    • (Score: 4, Touché) by threedigits on Monday July 06 2015, @05:21PM

      by threedigits (607) on Monday July 06 2015, @05:21PM (#205736)

      "I can't pay back my loans? Well that's the bank's problem, I will just walk away."

      Nice attempt at analogy, but not quite accurate. Let's make a more accurate one:

      Greeks: I can't pay back my loans, the economic crash (created by the banks) is killing me!
      TheMan: Hurry, take this money and pay them back.
      Bankers: Thanks for the fish!
      Greeks: Now what?
      TheMan: now you owe me more than you owed the banks before. From now on you cannot buy gas or feed your children. All your money is for paying me.
      Greeks: but how will I make a living?
      TheMan: that's your problem.

      • (Score: 0) by Anonymous Coward on Monday July 06 2015, @11:53PM

        by Anonymous Coward on Monday July 06 2015, @11:53PM (#205903)

        That's a very concise - and honest - summary of the situation, as I understand it.

        It's coming for other countries, too - New Zealand has a right wing government that stopped paying down its national debt, started privatising anything that wasn't nailed down, and increased the national debt by more than $80 billion. There's been no diversification of its economy while the government has been eroding worker rights and trumpeting about how marvelous it is being a low wage economy, right before blaming the low wage workers for not working hard enough. (Unpaid overtime is the order of the day for minimum wage workers.)