We were basically brainstorming about Greece the other day and nobody could actually really say what happens if a country goes bankrupt.
I constantly hear the "DREAD" of it happening and every capitalist country in the world scurrying to stop it from happening. The IMF sweating like fat pigs in a sauna and the World Bank heaving and huffing like an Alabama MILF having her 20th kid.
But nobody seems to be explaining to me what actually happens if Greece defaults. Does Greece disappear? Can't I go there on holiday anymore? Do they have to auction off Athens?
And say, like, they are forced to do sweat labour for 40 years to pay back the banks... what if they just say no? What if they just say: "scrotums to the lot of you, we invented democracy and we'll do as we bloody well like"?
What happens then? They start their own little financial system, create their own currency, jobs, etc. And people pay them money to go there on holiday and they use that money to buy oil to deep fry squid.
Call me paranoid, but it seems the only people who don't want Greece to default are the capitalists, because then everybody will realise it's all a pile of horse manure (or Kopria alogou as the Greeks might suggest whilst waving a middle finger or two in the air) and not want to tighten their belts to pay for the financial crisis the governments and banks have gotten us into.
Indeedy, so paranoid am I, that I'd even go so far as to suggest that the billions of debt don't exist, except on paper (or in this case: on some rich git's computer screen).
So, please explain it to me so I can start my medication.
The effects are generally overstated. What will happen is that a few smaller banks will go bankrupt (the others will be bailed out by the taxpayers - again), and the Greeks may revert back to their own currency. What they are worried about is that a Greek default will make the faeces hit the air dispenser in Spain and Italy as well.
Originally posted by KazetNagorrayeah? And so what if it does?
The effects are generally overstated. What will happen is that a few smaller banks will go bankrupt (the others will be bailed out by the taxpayers - again), and the Greeks may revert back to their own currency. What they are worried about is that a Greek default will make the faeces hit the air dispenser in Spain and Italy as well.
Originally posted by AThousandYoungWhy would the military stop being funded? Why wouldn't Greece just invent a new, national, currency and fund the military from that?
I'm semi-serious. The military will stop being funded. Pirates might become a problem.
Also, money is backed by government force. You never know who might decide to start breaking Greek kneecaps to get the money as Stewie did to Brian on Family Guy.
Originally posted by shavixmirGreece defaulting would drag down the whole flimsy house of cards and expose the bankers once and for all as the vampire squid that they really are. In the short term there would be great trauma, but in the long term there would be much rejoicing.
We were basically brainstorming about Greece the other day and nobody could actually really say what happens if a country goes bankrupt.
I constantly hear the "DREAD" of it happening and every capitalist country in the world scurrying to stop it from happening. The IMF sweating like fat pigs in a sauna and the World Bank heaving and huffing like an Alab ...[text shortened]... git's computer screen).
So, please explain it to me so I can start my medication.
Originally posted by shavixmirI read through the various answers, but the truth is that nobody really knows exactly, but also nobody wants to find out, or face that as reality.
We were basically brainstorming about Greece the other day and nobody could actually really say what happens if a country goes bankrupt.
I constantly hear the "DREAD" of it happening and every capitalist country in the world scurrying to stop it from happening. The IMF sweating like fat pigs in a sauna and the World Bank heaving and huffing like an Alab ...[text shortened]... git's computer screen).
So, please explain it to me so I can start my medication.
It is somewhat like personal bankruptcy. You don't die, or go to a debtors prison, or even serve a period of indentured servitude, as you might have in times past. Using credit for a time may be problematic.
In the end, bankruptcy is supposed to teach either an individual or a government that they can't borrow and buy everything they want without consequences. The trouble with the system is that it isn't punitive enough, so many people and governments don't learn much of anything, except how to get back to doing what they did before.
The characteristic is that the people who behaved responsibly are the ones who pay for those who did not.
No one knows thats true. But we can look at Argentina and see what happened there.
They are growing quickly now but it was a painful expensive process, especially for those on fixed incomes as rampant inflation took hold.
The bigger problem would be for Europe as a whole. As it tries to pay off its debts there will be little money to invest in jobs and infrastructure.
Originally posted by stokerThe question that was preoccupying me this morning as I read in The Times about Merkel's apocalyptic threats regarding what would happen if the euro were to fail was - why is Germany so desperate to save this particular house of cards? If Germany left the euro tomorrow (presumably accompanied by Austria and the Netherlands, whose economies are very closely tied to the German one), then the Neuer Deutschmark would instantly appreciate against the euro, which would eventually boost the Mediterranean economies left behind, since they could benefit from cheap exports to Northern Europe.
greece would be hit with inflation, similar to germany pre war, there black market would spiral even more so, house prices would crash, the banks would be in worthless, they would leave the euro, but the euro would stablize.
So why not have fiscally responsible Germany, Austria, Holland and Finland out of the single currency, and allow the euro to be replaced by the... Mediterraneo?
Originally posted by TeinosukeI think you are right this would be a good move on a number of levels.
The question that was preoccupying me this morning as I read in The Times about Merkel's apocalyptic threats regarding what would happen if the euro were to fail was - why is Germany so desperate to save this particular house of cards? If Germany left the euro tomorrow (presumably accompanied by Austria and the Netherlands, whose economies are very closel ...[text shortened]... d Finland out of the single currency, and allow the euro to be replaced by the... Mediterraneo?
However there are obvious problems with this.
Firstly transition costs - would be huge and complex.
Secondly would the single european market remain? Would there be a fiscal union in the two new areas?
Thirdly trade would diverted away because the economies of scale of a smaller region would be diminished?
Finally does Germany really want a really strong currency? - which would make her exports even more expensive and harm their competitiveness.