Some sort of semi-coherent collage of notes on the Greek situation (1) | 87 comments (87 topical, editorial, 0 hidden)

Re: Helping Greece? (none / 1)

But Greece would still need to run substantial deficits to avoid a depression. Would that be possible after default and without help from a friendly central bank?

by generic on Sat May 15th, 2010 at 02:05:26 PM EST
[ Parent ]

Re: Helping Greece? (none / 1)

Sovereign deficits? Certainly.

Current account deficits? Less certain, but still not entirely unlikely.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat May 15th, 2010 at 02:08:21 PM EST
[ Parent ]

Re: Helping Greece? (none / 0)

If Greece stays in the Euro with all the limitations it implies? I wouldn't be so sure about sovereign deficits.

by generic on Sat May 15th, 2010 at 02:17:45 PM EST
[ Parent ]

Re: Helping Greece? (4.00 / 3)

If push comes to shove, Greece can issue Greenbacks.

Then the deficit chickenhawks would have to either back down or move for expulsion. And the chickenhawks have a blocking minority, but they don't have a qualified majority.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat May 15th, 2010 at 02:22:50 PM EST
[ Parent ]

Re: Helping Greece? (none / 0)

What is the mechanism for expulsion? I don't think there is one.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Sat May 15th, 2010 at 06:06:07 PM EST
[ Parent ]

Re: Helping Greece? (none / 0)

Then the deficit chickenhawks will need to make one.

Doesn't matter, though, they still won't have a working majority.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat May 15th, 2010 at 06:07:19 PM EST
[ Parent ]

Re: Helping Greece? (none / 0)

Well you may expel them, but how do you actually stop Greece from using it?

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Sun May 16th, 2010 at 10:21:40 AM EST
[ Parent ]

Re: Helping Greece? (none / 1)

Stop them from issuing Greenbacks?

You can't.

If the threat of expulsion from the relevant communities is not sufficient (and if the local population accepts the Greenbacks as payment for services rendered), the only way to stop them is sending in the gunboats.

But of course, if they are forcibly ejected from the €-zone, they would have no particular reason to issue Greenbacks instead of just printing their own money.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 16th, 2010 at 01:45:47 PM EST
[ Parent ]

Re: Helping Greece? (4.00 / 2)

What is to prevent e.g. Iceland declaring that the Euro is now its national currency?

Frank's Home Page and Diary Index

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun May 16th, 2010 at 09:38:01 AM EST
[ Parent ]

Re: Helping Greece? (none / 1)

Nothing.

But they can't print €-notes or mint €-coins without permission from the Bundesbank.

Well, actually they can, but the official EU stance would be that they were counterfeiting.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun May 16th, 2010 at 01:47:58 PM EST
[ Parent ]

Re: Helping Greece? (4.00 / 3)

I think Greece's 120% debt-to-GDP ratio would corresponds to the need to pay about 7% GDP in interest, and roll over about 25% of GDP in principal.

So, a default would free up about 30% of GDP in government expenses. Though, in terms of reducing deficit, only the interest payments would count.

So I'm not sure Greece couldn't make do just with the tax revenue. Plus, they could issue some sort of IOUs redeemable in payment of state taxes as a form of currency.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Sat May 15th, 2010 at 06:04:15 PM EST
[ Parent ]

Some sort of semi-coherent collage of notes on the Greek situation (1) | 87 comments (87 topical, 0 editorial, 0 hidden)

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