Skip to content

Cost of Living

Viewing 20 posts - 961 through 980 (of 1,118 total)
  
  • Author
    Posts
  • #19222
    garrigue
    Participant
        • Topics: 16
        • Replies: 94
        • Total: 110
        • BIC Full Member
        • ★★★★★
        Member since: 26th September 2009

        For sometime I have been of the view that there will have to be a further massive debt write-off. Now I see the press are starting to talk about the idea. It is inevitable, but it will not happen for a quite while. Last summer Merkel decided Greece was no longer a no hope case and she surely knows the debt write-off is coming. However, as she is the paymaster, she is going to make sure that Greece gets its house in order first. She or a successor has to justify it to the German electorate.

        Also, for this reason there will be no let up in the austerity. The only other option is to leave the euro and go back to the drachma. Most Greeks want to stay in the euro and, in my opinion, for good reason. Despite the current pain, most believe the move back to the drachma would be instantly catastrophic at least in the short-term and most probably for quite a number of years afterwards. Why otherwise have the “failed” centrist parties with their pro-euro policies still clung to power?

        Compare hotel prices and find the best deal - HotelsCombined.com
        BullionVault

        #19223
        garrigue
        Participant
            • Topics: 16
            • Replies: 94
            • Total: 110
            • BIC Full Member
            • ★★★★★
            Member since: 26th September 2009

            For sometime I have been of the view that there will have to be a further massive debt write-off. Now I see the press are starting to talk about the idea. It is inevitable, but it will not happen for a quite while. Last summer Merkel decided Greece was no longer a no hope case and she surely knows the debt write-off is coming. However, as she is the paymaster, she is going to make sure that Greece gets its house in order first. She or a successor has to justify it to the German electorate.

            Also, for this reason there will be no let up in the austerity. The only other option is to leave the euro and go back to the drachma. Most Greeks want to stay in the euro and, in my opinion, for good reason. Despite the current pain, most believe the move back to the drachma would be instantly catastrophic at least in the short-term and most probably for quite a number of years afterwards. Why otherwise have the “failed” centrist parties with their pro-euro policies still clung to power?

            #19224
            YoMo2
                • Topics: 37
                • Replies: 574
                • Total: 611
                • Practcally Cretan
                • ★★★★★★
                Member since: 24th March 2011

                Everyone knows exactly what needs to be done, but as usual the game of brinkmanship goes on at the expense of ordinary people who are paying the price.

                Nothing that has happened over the past five years has tackled the real issue.  Only made things worse, much worse.

                The sooner someone has the balls to accept the inevitable, the sooner we will come out of this mess.

                Greece needs to default now, and return to the euro.  To paraphrase Confucius from Topdriller’s earlier post.  The right decision is usually the most painful one.  However, it will not be anything like as painful as Samaras and Co would have you believe.  They are just desperate not to become pariahs on the European political scene.  Not interested in what is best for the country.

                And the fact that most Greeks want to stay in the euro means nothing.  That is an emotional rather than a rational position, I’m afraid.  Call it fear of the unknown if you like.

                Until Greece regains control of its own destiny, things will never get sorted out.  And I say that not just as a reaction against the idiots in Brussels, but also because I believe that the budget will never balance until it is forced to.  We need to get rid of the debt burden that has been loaded on to us, and start running a balanced budget.  Unavailability of more bailout money will force the Greek government to start addressing the issue.

                Yes, it will be painful for a while, but at least there is the prospect of a resolution.  Continuing to be jerked around by Merkel and Co just guarantees a continuation of the present situation.

                Imported goods and motor fuel will go up for sure.  On the other hand the tourist industry and the property market will take off.

                If imported goods go up, maybe Greeks will start to buy Greek again.  Many, many business will start up to take advantage of this.  There are many neglected sectors that could be developed to provide Greek products to the home market.  We need growth not austerity, but genuine sustainable growth.

                I’m sure lots of BICers will disagree with me, but when you look at the community of international economic commentators you will see they are probably split 50/50 on return to the euro.  So I don’t think it’s a no-no by any means.

                Must go back to chopping wood for the woodburner now, heating oil already up to 1.40……

                Andrew

                #19225
                daveellen
                    • Topics: 25
                    • Replies: 87
                    • Total: 112
                    • BIC Full Member
                    • ★★★★★
                    Member since: 25th January 2011

                    If I didn’t live here and have some good Greek friends then I would agree 100% with the return to the Drachma – as long as membership of the EU was retained.
                    But with the current economic and political infrastructure a unilateral default would only ‘wipe off’ one debt mountain in order to start another! Both because of populist politics and because the cost of essentials [food, fuel, medicines] would soar – and that assumes suppliers would accept a Drachma underpinned by nothing.
                    Greece is being overwhelmed by its own mistakes but mainly it is happening during the greatest world recession since the 20’s and a faltering acceptance that growth based purely on ever increasing discretionary consumer spending is not sustainable.
                    Greece ‘invented’ hubris and this is a time when pride must be put aside and the least worst solution has to be accepted. I never liked my employers but had to accept that if I wanted my salary I had to play by their rules [at least until I was sure I could afford to tell them to ‘go away’ I can survive on my own now  ;D]
                    If Greece wants to return to the Drachma then start planning for it by implementing the reforms that would allow for a secure future.

                    #19226
                    YoMo2
                        • Topics: 37
                        • Replies: 574
                        • Total: 611
                        • Practcally Cretan
                        • ★★★★★★
                        Member since: 24th March 2011

                        Quite right about reforms being needed. But why have the reforms not happened yet? Because when you can just kick the can down the road and wait for the next fudge there is no incentive.

                        Leave now and sort it out as soon as. My view anyway.

                        Andrew

                        #19227
                        Topdriller
                            • Topics: 76
                            • Replies: 1435
                            • Total: 1511
                            • Practcally Cretan
                            • ★★★★★★
                            Member since: 3rd March 2007

                            It’s got to be remembered that the bailout money is not a gift, it too will have to be repaid to the lenders i.e. ECB, IMF etc.

                            What’s more, a large chunk of the bailout money is being used to pay off previous loans, as well as pay for bloated pensions, State salaries etc.

                            Northern European governments are already baulking at giving Greece any more money which only brings the possibility of a disorganised default closer.

                            Andrew is correct, a return to the Drachma would immediately stimulate the tourist industry (18% of Greece’s overall GDP and a far higher percentage of Crete’s GDP).  What’s more, a 100% default on all loans would save billions every year in repayments.

                            More importantly, Greece could no longer import German, French "luxury goods" and if, for example, it wanted chain saws to cut down olive trees they would have to build their own.  Is this such a bad thing?

                            Something else, the Germans, French etc. would suddenly view Greece as a good place to build a factory and build goods within Europe since their labour costs would be considerably lower once they returned to the Drachma.

                            The main problem area would be imported fuel for cars and power stations and this would be the primary concern for the first year or two after Greece returned to the Drachma. 

                            Ask yourself this, do Greeks really need to spend their hard earned cash on imported iphones, ipads, luxury cars, 3D televisions or do they need to get back to basics, rebuild their economy – using only sustainable means – and reform the way they regard income tax?

                            Jon

                            #19228
                            YoMo2
                                • Topics: 37
                                • Replies: 574
                                • Total: 611
                                • Practcally Cretan
                                • ★★★★★★
                                Member since: 24th March 2011

                                Exactly right, back to basics. The sooner the better.

                                Andrew

                                #19229
                                Topdriller
                                    • Topics: 76
                                    • Replies: 1435
                                    • Total: 1511
                                    • Practcally Cretan
                                    • ★★★★★★
                                    Member since: 3rd March 2007

                                    Speaking of the EU and their devious, undemocratic machinations:

                                    On Thursday there is an EU budget meeting.  The Brussels mandarins want the collective countries to vote for a seven year budget which will increase member state contributions by 5% a year.  25 of the 27 member states have already agreed in principal with only the UK and Sweden saying no to the 5% increase.  Cameron has said he will veto the proposals unless the budget remains at present levels i.e. an effective drop in contributions over the next seven years.

                                    The EU mandarins – you know, the guys who have been appointed not elected – have suggested their very well paid lawyers can get around the UK veto by re writing the seven year budget and turning it into seven x 1 year budgets.  By doing this the UK’s veto would be null and void because yearly budgets can be passed by a majority of member states.

                                    The fact that their proposal will probably fail, because to make it work they would need a change in the treaty, doesn’t hide the fact that the EU mandarins will do almost anything – apart from use democratic means – to get their own way.

                                    Over the weekend a survey suggested that over 60% of the UK electorate would be happy for the UK to leave the EU.

                                    One has to wonder how long it will be before people across Europe finally realise that the EU (once known as the Common Market) has become a self serving undemocratic monster prepared to bend any rule or treaty to get it’s own way?

                                    Jon

                                    #19230
                                    garrigue
                                    Participant
                                        • Topics: 16
                                        • Replies: 94
                                        • Total: 110
                                        • BIC Full Member
                                        • ★★★★★
                                        Member since: 26th September 2009

                                        Hi YoMo2, you say "We need to get rid of the debt burden that has been loaded on to us". I beg your pardon, but was it not the Greeks themselves that loaded the debt on themselves! It was after all them that spent the money and already they have had a substantial debt write off. So far its been a bit like borrowing a £100 from a bank at a low interest rate and on top of that getting a £100 cash back! My guess is that eventually Greece will probably pay back about 10p for every pound it has borrowed. I don’t think anyone can complain about that. As regards kicking the can down the road, that is what the Greeks have done consistently over many years – nobody wants any change. It is Merkel and Co who are saying enough is enough, now the music stops – fix it now.

                                        YoMo2, how do you justify your comment "And the fact that most Greeks want to stay in the euro means nothing". Opinion poll after opinion poll during the election consistently showed a large majority of Greeks wanting to stay in the EU and eurozone. I guess they don’t say that sort of thing for entirely no reason. Perhaps they like the idea of being able to rely on something. I must say I get the impression from you and Topdriller of a going back to the land mentality. It’s just not realistic.

                                        I am sure you are right Topdriller that the 18% of Greece’s economy that is the Tourist industry will benefit from a move to the drachma. So lets say it grows at 10% pa (very high) for 2 or 3 years (until Greece is full). That might add 5 to 7% to GDP. I don’t think it is going to make up for the 20% of GDP lost in the recession so far or the further 20 to 30% that might be lost from a move to the drachma. Also, if Greece defaults I doubt anyone would be rushing to build factories in Greece no matter the cost of labour being cheap. Most businesses looking at overseees expansion want first and foremost be sure their investment is safe. Nobody would lend Greece anything. It would be completely devoid of the capital needed to invest in expanding its industries.

                                        #19231
                                        YoMo2
                                            • Topics: 37
                                            • Replies: 574
                                            • Total: 611
                                            • Practcally Cretan
                                            • ★★★★★★
                                            Member since: 24th March 2011

                                            Garrigue, you are ignoring the facts. Until relatively recently Greece’s debt to GDP ratio was not much worse than the other south European countries. Top end of the scale admittedly, but not way out of line. Then when it started to get out of line and the speculators started to circle, the EU failed to take a grip and just kicked the can down the road. It was the EU that failed time and time again to grasp the nettle in the early days, making the situation worse every year. And far from saying enough is enough they have just agreed to another two year extension for meeting the debt ratio target. Most of the debt Greece now has is as a result of bailout loans. And lets not forget that all these loans are making money for EU governments and institutions. I think 85 or 90% of each bailout goes back to these people as repayments. So where is the benefit?

                                            Another point. Personal borrowing in Greece at the start of the recession was much lower than in most EU countries, certainly massively lower than in the UK. The borrowing was done by the government; unwisely for sure, but watched and sanctioned by the Eurocrats. This problem was obvious and predictable from the beginning of the euro.

                                            We can debate how and where the money went for hours. The only issue is what do we do now. We can carry on fudging as we have for the last 5 years, which is what you seem to be suggesting. Or we can cut to the core of the problem and resolve it finally. Countries like Greece have no sustainable future in the eurozone because they are so ill-matched with the north European economies.

                                            Whether or not the Greek voters want to stay in the euro or leave is a total red herring. The only question is what is the correct course of action. Most voters do not have sufficient understanding of the issues to make that decision. That’s what we pay our politicians for. (Hollow laughter). Of course the chances of the politicians taking a correct decision for the long term good of the country as opposed to taking decisions that keep them in power are minimal. Pretty much as in any other country……

                                            I don’t think anyone is suggesting going back to the land. What is being suggested is that the country regains control of it’s own destiny, and rebuilds it’s economy without being bled dry by European banks and institutions. Much of this can be done by developing domestic industries. Obviously raising capital outside the country will be a problem, but overseas investors looking to start up businesses will also come after a settling down period. They just need to see opportunities. They will not care about the default, they raise their own money outside Greece.

                                            Another sector that would benefit from a return to the drachma is property/construction. Once things settle down overseas buyers of property will flood back to Greece since property will be much cheaper in their own currencies against a devalued drachma.

                                            Default and leaving the euro will be painful. It’s debatable how much worse it will be than struggling on as we are. And it is the only course of action that has a future.

                                            Andrew

                                            #19232
                                            Topdriller
                                                • Topics: 76
                                                • Replies: 1435
                                                • Total: 1511
                                                • Practcally Cretan
                                                • ★★★★★★
                                                Member since: 3rd March 2007

                                                042E333E25283E470 wrote: Opinion poll after opinion poll during the election consistently showed a large majority of Greeks wanting to stay in the EU and eurozone. I guess they don’t say that sort of thing for entirely no reason.

                                                That’s fine, but to stay in the Euro you need to not only read but also obey the rules that come with using a multi country currency.  The only reason the Greeks think the Euro is good for them is because their so called leaders have not obeyed any of the rules and have in fact consistently flouted them at every twist and turn.

                                                So, if they wish to remain in the Euro every strata of Greek society has to make, accept and put through the austerity cuts – and not just for a month but for a generation – to bring their debt down to manageable levels.

                                                Poll the Greek people tomorrow on the present austerity cuts, never mind the future cuts in the pipeline, and I’d bet even more would say enough is enough – we cant take any more. 

                                                We therefore have a conundrum i.e. the Greeks like the Euro because for the past ten years it has been akin to using an open ended credit card belonging to someone else.  Now, they have to repay the debt and interest on that same credit card and if they want to remain within the Euro Zone they will have to obey all the rules going forward.

                                                What’s more, and even if Greece remains within the Euro Zone, who in their right mind – apart (perhaps) from the ECB – is going to lend them future money when lenders have already taken a haircut and no doubt will take a further haircut over the coming months?

                                                042E333E25283E470 wrote: Also, if Greece defaults I doubt anyone would be rushing to build factories in Greece no matter the cost of labour being cheap. Most businesses looking at overseees expansion want first and foremost be sure their investment is safe. Nobody would lend Greece anything. It would be completely devoid of the capital needed to invest in expanding its industries.

                                                If this is true, then it stands to reason that no one is going to be rushing in to lend the Greeks money full stop, so what’s the benefit of staying with the Euro?  Stay within the Euro and you have no control over your interest rates, no control over prices, no control over VAT rates, no control over anything inside your own borders when it comes to currency.

                                                Bring back the Drachma and you should immediately see a boost in tourism numbers.  Increase tourist numbers and you will need to build more hotels, develop infrastructure e.g. roads to accommodate the increase in numbers and that means local construction jobs and use of local materials.

                                                Bring back the Drachma (at the same time defaulting on all current loans) and most importantly ensure that the reforms already in place are continued at an even quicker pace and you might just have the taxes to cover your annual expenditure.

                                                The reason Greece’s GDP has gone into free fall is because they haven’t yet fully addressed their ongoing costs, Union militarism, closed shops etc. whilst at the same time their unemployment levels have soared.  This has had two knock on effects i.e. far higher unemployment benefits and a drop in taxes collected because 25%+ of the available work force is out of work.

                                                How on earth do you expect the Greek economy to recover with all of the above + the huge and unsustainable debt they are paying off each quarter with yet further loans from the EU?

                                                It’s time to bite the bullet, time for Greece to stand on it’s own two feet, time for it to smell, rather than just drink, the coffee!

                                                Jon

                                                #19233
                                                Topdriller
                                                    • Topics: 76
                                                    • Replies: 1435
                                                    • Total: 1511
                                                    • Practcally Cretan
                                                    • ★★★★★★
                                                    Member since: 3rd March 2007

                                                    12 hours of talks last night yet EU finance ministers still fail to grasp the nettle re Greece.

                                                    http://www.bbc.co.uk/news/business-20421246

                                                    "The eurozone finance ministers have been considering ways of reducing Greece’s public debt, which is projected to rise to 189% of gross domestic product, GDP, by next year.

                                                    The country’s bailout programme aims to get debt down to 120% of GDP by 2020.

                                                    "The Eurogroup has had an extensive discussion and made progress in identifying a consistent package of credible initiatives aimed at making a further substantial contribution to the sustainability of Greek government debt," Jean-Claude Juncker said in a statement.

                                                    There has been disagreement among the ministers and the International Monetary Fund, Greece’s other bailout creditor, on how to make the country’s debt manageable.

                                                    Schroders economist Virginie Maisonneuve: "Clearly we’ll have more negotiation"

                                                    The eurozone ministers favour giving Greece an extra two years, to 2022, to bring its debt to 120% of GDP, but the IMF has resisted that extension."

                                                    Let’s say that Greek debt is €400 billion and that the interest on the total loans overall is a modest 5%.  If the EU gives Greece a two year extension on their existing loans then the interest due – just for those two extended years – could amount to an additional €40 billion.

                                                    Greece’s current GDP per capita was estimated in 2010 at €18,961.  Over the last two years GDP has fallen by nearly 10% so the per capita figure today is probably closer to €17,065 i.e. 11 million people x €17,065 = the country’s GDP figure for 2012.

                                                    €40 billion divided by 11 million people = €364 each person will have to find (or earn for the country) simply to pay off the additional interest should the EU grant Greece a two year extension on repaying their debt.

                                                    And since the people can’t possibly find an extra €364 each this means Greece will have to borrow more money from the EU simply to pay the interest on the 2 year extension which will incur further interest payments.

                                                    And remember, the interest is compounded so before we even reach the proposed two year extension in 2020 Greece will be paying interest on interest for the next eight years.  Of course, the EU also expect Greece to have paid off 33% of the total debt by 2022 which means most Greeks will have starved to death by the time the extension comes into play!

                                                    The joys of being in the Euro Zone just keep on coming!

                                                    Jon

                                                    #19234
                                                    YoMo2
                                                        • Topics: 37
                                                        • Replies: 574
                                                        • Total: 611
                                                        • Practcally Cretan
                                                        • ★★★★★★
                                                        Member since: 24th March 2011

                                                        Yeah, I reckon those figures look about right.

                                                        So really,the politicians are just living in some sort of dream world. Or they know exactly what will happen but don’t have the balls to face up to it.

                                                        Hmmm, I wonder which one of those is true. Either way, I’m worried.

                                                        Andrew

                                                        #19235
                                                        Topdriller
                                                            • Topics: 76
                                                            • Replies: 1435
                                                            • Total: 1511
                                                            • Practcally Cretan
                                                            • ★★★★★★
                                                            Member since: 3rd March 2007

                                                            The EU leaders have failed to reach agreement on a new seven year budget – now there’s a surprise.

                                                            The biggest net contributors i.e. the countries who pay in more monies than they get out (UK, France, Germany and Italy) made the argument that they can’t ‘sell’ austerity cuts to their own people while at the same time increasing the European budget by 4.8% per year.

                                                            Not surprisingly, the countries that pay in less than they get out – just about everyone else, including Spain, all voted yes to a 4.8% per year budget increase.

                                                            Once again, the EU has kicked the discussions into the long grass and will meet again in the New Year to see if they can work out a compromise.

                                                            I’m at a loss as to why we remain net contributing members of the EU when basically this means UK taxpayer’s money is subsidising the inefficiencies of French agriculture, the largesse of Greek politicians who over the years have used EU monies to buy votes etc.

                                                            What happened to the block of like minded European countries who simply wanted to set up a free trade agreement between participating nations?  Wasn’t that the original thought behind the ‘Common Market’?

                                                            The President of the European Council, Herman Van Rompuy, had circulated a revised proposal for the new budget at the start of the two-day summit and said he believed a compromise was possible.  He had tinkered with some of the monies going to CAP as well as the poorer countries but, unsurprisingly, made no cuts to the burgeoning and increasingly wasteful administration part of the budget i.e. the 30,000+ high paid EU civil services.

                                                            The more I read, the more I think Nigel Farage has a valid point re the self-serving, unelected people at the heart of Europe.

                                                            Jon

                                                            #19236
                                                            stavros
                                                                • Topics: 4
                                                                • Replies: 25
                                                                • Total: 29
                                                                • BIC Junior Member
                                                                • ★★★
                                                                Member since: 14th October 2011

                                                                Jon,

                                                                Nigel Farage is 100% correct. The EU is a hopelessly inefficient, wasteful, and at times corrupt organization. During the last 18 years, its accounts have never been signed off.

                                                                Stavros.

                                                                #19237
                                                                Topdriller
                                                                    • Topics: 76
                                                                    • Replies: 1435
                                                                    • Total: 1511
                                                                    • Practcally Cretan
                                                                    • ★★★★★★
                                                                    Member since: 3rd March 2007

                                                                    26253636372F2D440 wrote: Nigel Farage is 100% correct. The EU is a hopelessly inefficient, wasteful, and at times corrupt organization. During the last 18 years, its accounts have never been signed off.

                                                                    At times corrupt…?

                                                                    You’re too generous, Stavros!!

                                                                    Jon

                                                                    #19238
                                                                    YoMo2
                                                                        • Topics: 37
                                                                        • Replies: 574
                                                                        • Total: 611
                                                                        • Practcally Cretan
                                                                        • ★★★★★★
                                                                        Member since: 24th March 2011

                                                                        I think if Ilived in the UK I might well vote for the UKIP to try to produce a wakeup call to UK mainstream politicians.

                                                                        Some great performances from Nigel Farage on YouTube!!

                                                                        Andrew

                                                                        #19239
                                                                        garrigue
                                                                        Participant
                                                                            • Topics: 16
                                                                            • Replies: 94
                                                                            • Total: 110
                                                                            • BIC Full Member
                                                                            • ★★★★★
                                                                            Member since: 26th September 2009

                                                                            Quite a few commented in the past that Greece should follow Argentina’s example because of the apparent success of their default.

                                                                            I see this week that there was a massivive $1.3 bn court judgement against them in the US. This was in relation to bond holders who did not accept a compromise deal, ie the court ruled they should get the whole lot back. The ruling also required Argentina to pay those who did accept the deal – at the reduced sum I believe. The problem is that unless Argentina pays the whole lot, ie both the $1.3 bn and the sums due to the accepting bondholders, it will be judged to have defaulted again on its debts. So after 10 years (or something like that) they are still in dire trouble. They are still very largely locked out of the internatonal debt markets.

                                                                            I see also that currently in this global world of low inflation the inflation rate in Argentina is 25% pa! In the same article I was reminded that earlier this year Argentina sequestrated its largest oil company from its Spanish owner for, apparently, not investing enough! The Spaniards did not get a cent.

                                                                            I guess the trouble with reneging on your commitments, whoever you are, individual, corporation or country, is where does it stop and where does it lead you to. In Argentina’s case it looks like continued misery. In Greece’s case I think it would likely be a whole lot worse.

                                                                            #19240
                                                                            Topdriller
                                                                                • Topics: 76
                                                                                • Replies: 1435
                                                                                • Total: 1511
                                                                                • Practcally Cretan
                                                                                • ★★★★★★
                                                                                Member since: 3rd March 2007

                                                                                So, please explain how Greece will pay off the interest on their current loans, never mind the loans themselves, when their GDP has already dropped by over 25% in four years, unemployment is 25%+ and rising, they can’t cover their basic infrastructure costs and the only way they can meet their existing interest loan commitments is to beg / borrow more monies?

                                                                                Jon

                                                                                #19241
                                                                                daveellen
                                                                                    • Topics: 25
                                                                                    • Replies: 87
                                                                                    • Total: 112
                                                                                    • BIC Full Member
                                                                                    • ★★★★★
                                                                                    Member since: 25th January 2011

                                                                                    Further EU integration – California didn’t cause an international when it went bankrupt. Maybe because the other states weren’t making billions on the interest payments?

                                                                                    Not saying it will happen or should happen but there isn’t any other answer I can think of without long term chaos.

                                                                                  Viewing 20 posts - 961 through 980 (of 1,118 total)
                                                                                  • You must be logged in to reply to this topic.
                                                                                  Scroll To Top