Greece

[Orangetxguy]

What is going on with Greece makes people very nervous. Greece is a very old country. To think about one of the oldest economies in history failing is almost unthinkable. I think that it forces others, such as the U.S. to consider that if Greece can fail, so can we and others.

Ummmmmmmm.......Greece's economy is what.........about the same as that of Tennessee and Mississippi combined??

You can not judge their economic situation by the size or the age of the country. You have to look at the people governing the country, the general business climate, and the population as well. Greece depends on Tourism to sustain their economy. With the majority of the "middle class" hurting world-wide....no wonder they are in trouble. Prime example of how the rich don't help.

[Mr. Ford95]

That is correct Stan. Greece relies on tourism, they thought that getting the Summer Games would give them a huge boost in tourism so they borrowed a whole lot of money from Europe in order to build the facilities needed to put the Games on. The huge boost in tourism never happened so now they are stuck trying to pay off a lot of large debt to Europe while also asking for more money. They were banking on that boost in tourism to cover paying the debt back. The reason they can't get tourists is due to the cost of everything there. The cost of inflation has killed their tourism because nobody wants to spend such a huge amount of money in these economic times when they can visit a place like Ireland for much cheaper.

[MichiganDriver]

And then there's this:

Greece Is Not Contagious - TheStreet

Maybe the glory days of Alexander the Great are over.

[GMAN]

Ummmmmmmm.......Greece's economy is what.........about the same as that of Tennessee and Mississippi combined??

You can not judge their economic situation by the size or the age of the country. You have to look at the people governing the country, the general business climate, and the population as well. Greece depends on Tourism to sustain their economy. With the majority of the "middle class" hurting world-wide....no wonder they are in trouble. Prime example of how the rich don't help.

I wasn't thinking about the size of the Greek economy, but the age of their civilization. Greece has been going in a downward spiral for many years. Had it not been for the worldwide economic collapse, they might have continued for a while. At one time Greece was a major trader of goods around the world. As you stated, they are now mostly dependent on tourism. When the economies of the world are down then people don't travel as far from home and don't spend on things that are unnecessary. Although there is a hugh difference in the size of our economies, it is easy to see that we are heading down the same path of self implosion. I hope they can turn things around. The question is whether they have the will. It will certainly not be a popular political move to address their economic problems. One of the issues they will need to address is their huge retirement obligations. Like our social security, it will not be easy to face.

[Mr. Ford95]

And now it looks like Italy is back in trouble along with Greece. The future is looking bleak for them again.

'Weakening' Italy's Debt Rating Downgraded - Yahoo!

[robertt]

And now it looks like Italy is back in trouble along with Greece. The future is looking bleak for them again.

'Weakening' Italy's Debt Rating Downgraded - Yahoo!

It's not just "them". When and if any one of these countries start's to fall, it's going to be a domino effect, all of Europe is going to be in BIG trouble, which will end up affecting us.

[MichiganDriver]

They're all cooked.

S&P Cites Austerity In Its Downgrade Of Italy

[Orangetxguy]

They're all cooked.

Medium Rare??

[MichiganDriver]

For anyone that hasn't been following this. Forced austerity has cut Greek expenditures but every person laid off means one less taxpayer and every dollar in benefits cut means one less dollar being "money multiplied". The net effect is a severe recession with negative gdp growth and higher expenses. To get the next bailout money Greece is being forced to fire 100,000+ government employees.

Default would hurt but at least then the Greeks would have the power to devalue their currency.

As for Italy, Portugal, Spain and Ireland. They'll be watching what happens with Greece to see what their best move is.

Meanwhile, money is flowing out of Euro banks and German politics is a mess (lol complete with a political party called the "Pirate Party" - I'm not joking).

[MichiganDriver]

Medium Rare??

I'm thinking crispy.

[Mr. Ford95]

I think Ireland is in the best shape of any of them thus far but yes, once one goes they all start going. Ireland has been really hammering with tourism ads in the US and UK whereas the others have not been doing that as hard as the Irish have.

It's going to darn near take a miracle at this point for Greece and Italy is on the verge of needing a miracle, maybe they can get the Pope to perform one as part of his sainthood.

[GMAN]

For anyone that hasn't been following this. Forced austerity has cut Greek expenditures but every person laid off means one less taxpayer and every dollar in benefits cut means one less dollar being "money multiplied". The net effect is a severe recession with negative gdp growth and higher expenses. To get the next bailout money Greece is being forced to fire 100,000+ government employees.

Default would hurt but at least then the Greeks would have the power to devalue their currency.

As for Italy, Portugal, Spain and Ireland. They'll be watching what happens with Greece to see what their best move is.

Meanwhile, money is flowing out of Euro banks and German politics is a mess (lol complete with a political party called the "Pirate Party" - I'm not joking).

The Greeks no longer have their own currency since they joined the EU. The use the eurodollar and cannot devalue it themselves. However, if they do default it might have an impact on the eurodollar.

[MichiganDriver]

The Greeks no longer have their own currency since they joined the EU. The use the eurodollar and cannot devalue it themselves. However, if they do default it might have an impact on the eurodollar.

I meant if they default and drop out of the Euro. They would then be able to devalue Drachmas all they want. Some people are saying that default is possible while staying in the EU. I wonder if that would be tolerated.

After 2 days of conference calls between Greece and the people representing their creditors there was no major announcement which of course means that no agreement was reached. Greece could run out of money in Oct but I think that just means Gov employees wouldn't get paid (is that default???). The next debt payment they have to make isn't until Dec and if they fail to make that, it's default by anyone's definition. That gives 2 months between apparent default and real default to work things out. Or the Greeks could simply announce default sooner (I think).

That bond I was posting pics of early in the thread - the 2 year Greek bond. It got up to 75% last week when it looked like default was about to happen. It dropped back down to under 55% by last Friday. Now it's over 65% and climbing. For people that know even less about bonds than I do (and someone please correct me if I'm wrong!), a 75% return on a two year Greek bond means you buy a $100 bond for $40. Two years from now Greece pays you $100 for it which gives you around $30/yr interest - about 75%/yr. For comparison, the 2 year US bond pays around 2%.

Edit: For an idea of how cooked Greece is - from the NY Times...

Total Greek public debt is about 370 billion euros, or $500 billion. By comparison, Argentina’s debt was $82 billion when it defaulted in 2001; when Russia defaulted, in 1998, its debt was $79 billion.