Greeks Reject Bailout Terms • Hacker News Board

Re: Greeks Reject Bailout Terms

#351

Post by maaku » Mon, Jul 06, 2015, 4:53 AM UTC

littletimmy wrote: post #314

What's most interesting to me in this entire crisis is the moral discourse surrounding debt. More often than not, you'll hear stuff like: "Of course Greece must pay its debt", "You mean to say you can just take money and not pay?", "Why should taxpayers bail Greece out?"... All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging t…

Not to mention what is actually happening here -- publicizing private debts. Why should European taxpayers be on the hook for risky bets made by Deutschebank et al? That's what's really going on here. Nearly all of the bail out funds received by Greece have gone to paying back debt. Which sounds like a good, moral thing. But what that actually means is that public money (IMF or ECB loans, backed by governments and therefore taxpayers) is used to pay off the mainly private debt holders which hold Greek national debt. The banks which made the risky bets in the first place are getting their money back -- with interest* -- and the risk is being entirely taken on by taxpayers. So that when Greece does default -- and austerity is making that inevitable -- the bankers which made those stupid loans will have long since skipped the country, cash in hand.

TL;DR - the European bail out of greek debt is really a public bail out of the private banks -- Deutschebank, Goldman Sachs, etc. -- who made the stupidly risky bets in the first place. DB and GS are getting face value* for their worthless greek bonds, and the taxpayers are left on the hook.

But good luck getting that side of the story ever told in the media. DB and GS shareholders need their profits.

* There was a haircut by the private debt holders at one point in time, but interest on that debt has basically made up for it. It was still a profitable investment.

(Lesson for anyone aspiring for a profitable career in international finance: find the weakest member of an organization like the Eurozone, and offer them as much debt as you can get them to take. It will have stupidly high interest rates (e.g. >7%) because it will be so risky. But importantly, make sure that you take on so much debt that a default would ruin you. This is vitally important. Now wait for the inevitable to happen and your own government to bail you out because you are Too Big To Fail. Be sure to have a golden parachute in place in case a socialist is in power when it happens, but don't worry at worst you might lose one year's bonus. You will never go to jail.)

Re: Greeks Reject Bailout Terms

#352

Post by vamur » Mon, Jul 06, 2015, 4:56 AM UTC

Good for Greece. What they now need asap is digital drachma with automatic tax on incoming transfers, capital controls on imports, default on debts to ECB, haircut on deposits above 100k, exit Schengen/Russia sanctions and currency swaps with Russia and China/India. Next they need to improve balance of trade by devaluing drachma, removing expensive imports, replacing EU imports with imports from China, encouraging local food and energy production, exporting fish/fruits/vegetables to Russia and China. Also cut defense expenses with defense pact with Russia vs attack by Turkey and sell old military equipment to Iraq. Once all of this is done, they can start fighting corruption and waste, which can be done by cutting max pensions, reducing the public sector and centralizing government services.

Re: Greeks Reject Bailout Terms

#353

Post by mitchty » Mon, Jul 06, 2015, 4:58 AM UTC

alasdair_ wrote: post #264

mitchty wrote: post #185

Earlier quoted context omitted.

Not even close, Delaware, Minnesota, and Illinois are the top 3 that get the least back from federal taxes on a per dollar basis. http://www.theatlantic.com/business/archive/2014/05/which-st... California is almost parity for dollars in versus received. The bigger question is if that is even a valid comparison to make that 14 states get back less in federal dollars than input. If it is then you'll have to concede tha…

>on a per dollar basis. Surely what matters is actual dollars. Delaware has less than a million people living in it. California has almost forty million. So long as CA is contributing a net positive percentage to the federal government, it's very likely that they are contributing more overall to the well being of the nation than Delaware is.

Thats great, so which is it then, total dollars or return on federal dollars?

If i put in 1k in federal taxes and get 800 back, what matter is it what state i'm in? Or are we saying Delaware residents getting 70 cents on the dollar is not as bad as Californians getting 95 cents because there are more people, thus Californians are more important?

I'm honestly not trying to be a dick here but what exactly is the argument outside of if you aren't California or New York, you're not important to the conversation.

Give me numbers not supposition, how much has California invested in federal dollars versus the other 14 states getting less than their input. Without that this amounts to a pointless discussion.

Re: Greeks Reject Bailout Terms

#354

Post by Lazare » Mon, Jul 06, 2015, 5:18 AM UTC

maaku wrote: post #351

littletimmy wrote: post #314

What's most interesting to me in this entire crisis is the moral discourse surrounding debt. More often than not, you'll hear stuff like: "Of course Greece must pay its debt", "You mean to say you can just take money and not pay?", "Why should taxpayers bail Greece out?"... All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging t…

Not to mention what is actually happening here -- publicizing private debts. Why should European taxpayers be on the hook for risky bets made by Deutschebank et al? That's what's really going on here. Nearly all of the bail out funds received by Greece have gone to paying back debt. Which sounds like a good, moral thing. But what that actually means is that public money (IMF or ECB loans, backed by governments and th…

First, a minor point: The biggest holders of Greek debt were French banks by far, followed by UK banks and only then German banks. So when you say "Deutschebank, Goldman Sachs, etc." what you mean is BNP Paribas. But if you don't even know which banks—or countries—were involved, it raises questions. And I have no idea why you tossed Goldman Sachs in there; they never held significant amounts of Greek debt. They helped sell the debt; they were much too smart to buy it, much less keep it. The suckers here were, overwhelmingly, the French banks.

Second: "There was a haircut by the private debt holders at one point in time, but interest on that debt has basically made up for it." That's utterly wrong. It's so wrong, I'm not even sure how you could make that sort of error in good faith. Private banks lost 75%+ of the value of their Greek debt, in large part due to a forced reduction in interest rates. It's almost worthless because they have no ability to make it up via interest.

As a result, the private sector has basically written the entire thing off as a bad idea and walked away; the only real holders of Greek debt left are the troika and domestic Greek institutions.

We're discussing matters of public record. BNP Paribas loss on it's greek debt holdings is in their accounts in black and white. Who owns the debt, what the terms are, what the yield is; all of that is readily available, and none of it is what you imply.

If you want an example of publicizing private debts, look at the Irish bailout, not the Greek haircut.

Re: Greeks Reject Bailout Terms

#355

Post by ssalazar » Mon, Jul 06, 2015, 5:29 AM UTC

twobits wrote: post #306

ssalazar wrote: post #238

Earlier quoted context omitted.

Pffff ridiculous. Can we starting calling this the Godwin's Law of economics? Economic policy intended to rebuild an entire continent after the most traumatic conflict in its history is necessarily going to differ from policy during times of peace.

So your solution is for greece to start WW3?

Ha. Is that a joke?

Re: Greeks Reject Bailout Terms

#356

Post by markvdb » Mon, Jul 06, 2015, 5:44 AM UTC

hibikir wrote: post #271

minot wrote: post #92

Earlier quoted context omitted.

> Concluding, I'd rather go back to the Drachma and blow the Euro project than die starving becuase it suits your country's political class. Serious question: Why do you think switching currency to Drachma will solve anything? From what I've heard and read, Greece can't spend its way out of this problem because it lacks trust among creditors.

The real Greek problem is not really government debt itself, but the private Greek economy. Even if all government debt was pardoned, straight up, they'd still be in trouble. The Greek government might have a lot of debt, but most of its obligations are not to servicing said debt, but to keep services running internally, and most of those expenses are paid to Greeks. If Greece had its own currency, inflating away som…

The Greek government has recently run a primary surplus. This means they would _not_ be in trouble if all government debt was pardoned.

Re: Greeks Reject Bailout Terms

#357

Post by pjmlp » Mon, Jul 06, 2015, 5:52 AM UTC

galfarragem wrote: post #268

paskster wrote: post #59

Earlier quoted context omitted.

I am very pro Euro. But I don't like the fact that a single country in Europe feels that 18 other countries have to pay their debt. These bailouts in the past were signed from the greece government in the best interest of its people. A lot of people make it seem that we (non-greece european) somewhat forced theses agreements onto greece. In fact these bailouts where were unpopular in Germany, because it cost us a lot…

I'm Portuguese but I completely agree with you. Greeks have chosen their path. Farewell Greece.

Just wait until they come to us next.

I bet we would have voted the same if given the opportunity.

Re: Greeks Reject Bailout Terms

#358

Post by Russell91 » Mon, Jul 06, 2015, 5:54 AM UTC

Lazare wrote: post #354

maaku wrote: post #351

Earlier quoted context omitted.

Not to mention what is actually happening here -- publicizing private debts. Why should European taxpayers be on the hook for risky bets made by Deutschebank et al? That's what's really going on here. Nearly all of the bail out funds received by Greece have gone to paying back debt. Which sounds like a good, moral thing. But what that actually means is that public money (IMF or ECB loans, backed by governments and th…

First, a minor point: The biggest holders of Greek debt were French banks by far, followed by UK banks and only then German banks. So when you say "Deutschebank, Goldman Sachs, etc." what you mean is BNP Paribas. But if you don't even know which banks—or countries—were involved, it raises questions. And I have no idea why you tossed Goldman Sachs in there; they never held significant amounts of Greek debt. They helpe…

Nice response, Lazare. It's great to learn from people with the competence to understand the facts, and the desire to stay objective.

Re: Greeks Reject Bailout Terms

#359

Post by honest_joe » Mon, Jul 06, 2015, 6:09 AM UTC

tptacek wrote: post #164

makeitsuckless wrote: post #157

Earlier quoted context omitted.

Does the term "sovereign nation" mean anything to you? Do you feel an obligation to pay for the debts of Greece? No? Then why would a German, or me as a Dutchman feel such an obligation?

No, but then my country is not part of a decades-long effort to unify the continent it resides on under a single financial and regulatory regime; we finished doing that roughly 150 years ago. As a result, we don't have to "bail out" Mississippi so much as continually pay for its mismanagement. And so, again, isn't "paying for mismanagement" part of what you sign up for when you try to unify Europe?

USA is totally different from the EU. And that's the point.

Re: Greeks Reject Bailout Terms

#360

Post by honest_joe » Mon, Jul 06, 2015, 6:11 AM UTC

NotableAlamode wrote: post #91

atmosx wrote: post #43

Earlier quoted context omitted.

The fact that you are convinced that Germany acted in Greece's best interest is what sets us apart. Your money went mainly to your Banks, via Greece. Concluding, I'd rather go back to the Drachma and blow the Euro project than die starving becuase it suits your country's political class. ps. Even if Greece doesn't put the last nail on the coffin of the EU-project, I'm 100% sure that the UK will.

Your money went mainly to your Banks, via Greece. And if we send bread to feed the poor, you'd book that under "your money went mainly to your bakeries". It's just dishonest. Moreover, it's even factually false that the majority of the bailout money was used for bailing out banks. Only 1/3 of the credits were used for this purpose. The rest fuelled consumption in Greece, and/or was off-shored by the greek elites. you…

Germany and Austria should not have existed after WW2. They pretty much annexed economically Ostbloc via EU.