Is Greece going to set off the long feared next wave of the Great Recession?

It wouldn't surprise me to find that the real reason for the referendum is he finds he has painted himself into a corner and doesn't know what to do next.

georgeob1 wrote:

It wouldn't surprise me to find that the real reason for the referendum is he finds he has painted himself into a corner and doesn't know what to do next.

My guess as well.

My impression is Varoufakis & Tsipras believed they could either intimidate the EU/ECB/IMF leadership or goad them into some foolish or irresponsible retaliation. Happily they showed remarkable forebearance, and, so far, the adults appear to be winning the game.

I had thought that the Greek banking systems debt to the ECB is collateralized, but I am also reading that it is not. Does anyone know?

If this is unsecured debt then the argument for largely walking away from debt by not paying in Euros makes even more sense.

In recent days, as it has become clear that the Syriza government was not going to accept the latest proposal from its creditors, stress and anxiety has, in some cases, turned to outright anger.

“I just can’t believe these guys are willing to torch their own country,” one investor with a large holding of Greek bonds lamented in an email. “They thought this was a game. Now, when the supermarkets run out of food, gas stations run out of gas, hospitals have no medicine, tourists flee, salaries don’t get paid because banks shut — what are they going to do?”

Again with the theory that the Greeks were trying to out crazy the other side in a game of chicken and lost. I seem to be in a very small minority that is expecting that what we have been seeing is a program to get Greece out of the Euro in order to solve the problems that no one else has been willing to solve for all of these years.

we will know who is right within days.

In what way is the EU approach "Germany's game" ? Germany certainly benefits from a common currency with neighbors to which it exports so much. However, at the same time it provides a strong economic anchor for the rest of Europe = something the French and Italians can't say.

The Greeks may cast off their debt, but they will also retain the bad habits that created the debt, missing an excellent (and rare) opportunity to learn and institute some important economic lessons. In the long term that is the significant thing.

In the past, every time the situation has come to a head, Greece has caved. And, in the process, it has transformed itself into little more than a financial slave state mired in an economic depression.

There is no way Greece will ever be able to cut its way to prosperity, Krugman argues. And history suggests that any argument to the contrary is crazy.

Given that Europe refuses to restructure Greece's debt in a sustainable way and allow the country to try to grow its way out of its misery, Greece has no choice but to default and withdraw.

Krugman further notes that Greece's leader, Alexis Tsipras, is doing something else smart. Namely, he's not making the decision single-handedly. Rather, he is forcing his own government and people to make the decision with him, via a referendum. This will improve Tsipras' own odds of surviving the messy and scary period to come.



Read more: http://www.businessinsider.com/krugman-europe-greece-2015-6#ixzz3eQFspXrJ

PARIS (AFP) - Former International Monetary Fund (IMF) chief Dominique Strauss-Kahn broke his silence on the Greek debt crisis on Saturday, calling for Athens' creditors to accept a temporary suspension of payments. .
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The former French finance minister made the suggestion in a three-page declaration titled "On learning from one's mistakes", posted on his Twitter page Saturday as Greece teetered on the brink of default.

"My proposal is the following: Greece should get no more new financing from the EU or the IMF but it should get a generous maturity extension and significant nominal debt reduction from the official sector," Strauss-Kahn wrote.

- See more at: http://www.straitstimes.com/news/business/economy/story/ex-imf-chief-strauss-kahn-suggests-temporary-halt-greek-debt-payments-20#sthash.tz8oC5Jy.dpuf

That’s the thing. Mass withdrawals would mean either that the ECB has to cave and provide the aid necessary. Or, the Greek government would: and the only way they could do that is without using the euro, ie, they’d have to issue a new currency to do it.

The real point here is that it’s not just those governmental negotiations that matter. The liquidity of the Greek banks provides another ticking clock that everyone has to be aware of. And how loudly and how fast that ticks is in the hands of the population, the depositors, not those governments.

The Bruegal Institute in Brussels is not the only thinktank to believe the estimated €250bn cost of a Grexit, while covered by the bailout funds, would cripple the eurozone and delay recovery for a decade.

In effect, while the media and the culture have people believing that Jews collectively are the main group that have a sore spot relative to Germany, there are many other Europeans that seem to have that sore spot for Germany, I believe. That might be the dirty little secret, so to speak. I won't expect you to agree with me.