If Greece leaves the euro now or soon

[kagein]

Now that Greece have secured a second bailout, what would happen if Greece decided to leave the euro after receiving bailout cash. Theres a bit of a debate about it on my desk and i was wondering what you guys think.

Firstly, Is it even possible for them to take the money and run?

Secondly what would be the euros first reaction?

My initial thought is that the initial reaction would be the euro would weaken but i remember there was a rumor about a year and a half ago that greece were considering leaving and the euro and the euro rallied.

It will be interesting to note your comments

 

[MoonRocket]

..... what would happen if Greece decided to leave the euro after receiving bailout cash.

That would be stereotypical Greek.
Stereotypes exist for a reason.

 

[counter_violent]

Now that Greece have secured a second bailout, what would happen if Greece decided to leave the euro after receiving bailout cash. Theres a bit of a debate about it on my desk and i was wondering what you guys think.

Firstly, Is it even possible for them to take the money and run?

Secondly what would be the euros first reaction?

My initial thought is that the initial reaction would be the euro would weaken but i remember there was a rumor about a year and a half ago that greece were considering leaving and the euro and the euro rallied.

It will be interesting to note your comments

It's not possible for them to take the money and run, as it is quite clear that the money is released in tranches as time passes. Also the govt present and future have signed up to the bailout conditions, so whatever happens in the future it will not be an overnight decision to simply leave.

 

[kagein]

i was thinking this was a secret fear of some EU ministers, after insisting during the final stages of the meetings that part of the bailout money be paid into an escrow account and released in tranches

 

[counter_violent]

Have a look at this interview....this guy cracks me up....he demands respect

BBC News - Fmr Greek PM George Papandreou: 'Greece will not exit euro'

This was a deal done so that Greece met entry criteria into the EU. Compounding their problems before they even started.

http://news.bbc.co.uk/1/hi/business/8537676.stm

No functioning tax system....the country is simply a basket case, there's no kind way of putting it !

http://www.stopcartel.net/2012/02/1...turn_of_the_economic_'death_spiral'/1096.html

 

[Splitlink]

Unfortunately, it is the fault, also, of the rest for not looking at the books closely enough.

Greek cooking! Can't beat it!

 

[scose-no-doubt]

Unfortunately, it is the fault, also, of the rest for not looking at the books closely enough.

Greek cooking! Can't beat it!

Greece paid Goldman Sachs to fudge the books to meet the entry criteria. That's the problem with inflexible legislation imo. Everyone knows they fiddled their way into the EU but if they meet the criteria on paper what can you do?

Just like when the ratings agencies gave their rating models to the structured products departments in banks a blow-up was always inevitable.

Stupid idea anyway. What are they gonna do kick *insert periphery* out lol? Absoluete sh*tstorm. Bank runs and other associated systemic shock will bring the whole system to a crashing halt.

 

[data_editors]

Greece should have been allowed to default, if only to break the global culture-belief that bailouts will always happen - through write-offs/restructuring/cash relief.

Over the past few decades sovereign near-defaults were always met with support and sustenance - It became OK to default. See here's a list of sovereign defaults [courtesy of http://www.davemanuel.com/2010/02/12/the-last-13-major-sovereign-bond-defaults/] - my view is that it inculcated a culture of living beyond one's means.

Venezuela, July 1998 - defaulted on $270 million worth of domestic currency bonds

Russia, August 1998 - a massive $72,709,000,000 default that rattled the entire global economy.

Ukraine, September 1998 - $1.27 billion dollar default

Pakistan, July 1999 - defaulted in July of 1999 but quickly resolved the situation

Ecuador, August 1999 - missed a payment, leading an an eventual restructuring of over 90% of their bonds. Default amount was around $6.6 billion

Ukraine, January 2000 - defaulted again (1.06 billion) in January of 2000. ir c

Peru, September 2000 - defaulted on $4.87 billion of debt but rectified the situation within 30 days

Argentina, November 2001 - a massive $82.26 billion dollar default that once again rattled the global economy and worldwide markets.

Moldova, June 2002 - defaulted on $145 million worth of debt, only to rectify the situation a short while later, once to default once again

Uruguay, May 2003 - Argentina's troubles spread to Uruguay, and the government of Uruguay defaulted on $5.7 billion dollars worth of debt in May of 2003.

Dominican Republic, April 2005 - Defaulted on $1.62 billion dollars worth of debt in April of 2005.

Belize, December 2006 - Defaulted on $242 million dollars worth of debt in December of 2006

Ecuador, December 2008 - Defaulted on $3.2 billion dollars worth of debt obligations after calling several of their previous debt offerings "illegal and illegitimate".

Similarly, the LTCM blow-up met with concerted Fed and bank action through various measured to mitigate the losses. Message to other banks It's OK to speculate beyond one's means! It may not be far-fetched to assume that this could be one of the factors that led banks to lend irrationally in the housing market!

Could it be the bailouts are themselves perpetuating yet more crises, each larger than the previous?