What if WE (USA) were Greece ? Thoughts out loud

[MidWestLove]

Just hypothetical - say there is a country that overspends its income budgets by 30%+.  Accumulates debt at crazy rates (9T in 8 years under Obama? ) Has massive officially recognized and other levels of debts, lives on fantasy of if we vote for it then it is reality (more healthcare, student loan 'forgiveness', more everything, etc),  this time it is different , and the sun will never set over our empire.. Of cause this country also can (currently) print reserve currency which is does in abandon (de facto stealing from the rest of the world).

Now all of it is just general words for, think you are early retirement, and you get news that
- stock market is closed (for at least a week, likely more)
- you can not transfer money out of the country
- you can only withdraw up to $100 a day
- creditor nations (China primarily) are drawing up plans that would include cuts to your services , massive hikes in your taxes, demand that you sell property to pay them and then claim to genuinely not understand why you do not want to 'partner' with them.  for those curious with examples of proposal, see http://europa.eu/rapid/press-release_IP-15-5270_en.htm .

Questions
- does that change your attitude towards going for that level of certainty you thought you must have (withdrawal rates, etc.)  vs feedback that you can not control anything and success rates above certain amount are meaningless as life happens?
- does it change your desire to own something in addition to purely paper assets?
- any other thoughts and adjustments you may want to make to your plans

I personally, do not think sky is falling or the world is ending. I also doing regular allocation corrections which happen to be purchases of foreign large cap index class through Vanguard admiral funds. but I am also aware of my own history (Soviet Union collapse, another empire over which sun will never set because we are different), and am watching the euphoria here in my new home (USA) with degree of concern - a lot of bleeding hears here seem to have little care about basics of economics or no worries about financial state we are running into with ever increased speed. ACA (as much as I like it personally and intend to use) is one of the factors contributing to it.  Lastly, it is both entertaining and somewhat upsetting (for people of Greece) to watch EU rhetoric as it pushes capitulation terms on its supposedly member country. 

[grantmeaname]

It seems to me that this whole post except for one sentence is a bunch of things that you already thought about America, and all of which are completely independent of anything to do with Greece.

[nobodyspecial]

It makes me think that, what with the happenings in Greece, China, and Puerto Rico, I might wait a week or two to make a Vanguard contribution.

Works as long as nobody else in the market knows about Greece, china etc

[fb132]

What I don't understand is why the european stocks are down because of greece. I mean my international funds are down this week because of Greece, but yet my index funds have no greek companies. So can someone explain me why the european market is down when they have nothing to do with the problems with Greece?? I know it sounds like a newbie question, but I always wondered why one country's problem drags down the other markets, afterall you are investing in companies, not on what is going on elsewhere or am I missing the point?

[grantmeaname]

It makes me think that, what with the happenings in Greece, China, and Puerto Rico, I might wait a week or two to make a Vanguard contribution.

Yeah, it would suck if you accidentally bought while the price is low.

[Squirrel away]

They're all using the Euro. So, a hit in one market that devalues it affects them all.

+1.

I was listening to a financial expert today and she was saying that there was a worry that other countries with economic problems like Spain might also start taking their money out of the banks and putting them in, what is seen as, safer places like Italian banks. Loss of capital on those levels would cause even more problems.

[fb132]

I have a feeling were going to hit soon a market correction or we already entering it without even knowing it. It's been at least 2-3 months that the stock market has been about even (maybe with a slight gain), but I have a feeling the next few months will be rough. At least I will be able to take advantage of low prices.

[The Accidental Mustachian]

What I don't understand is why the european stocks are down because of greece. I mean my international funds are down this week because of Greece, but yet my index funds have no greek companies. So can someone explain me why the european market is down when they have nothing to do with the problems with Greece?? I know it sounds like a newbie question, but I always wondered why one country's problem drags down the other markets, afterall you are investing in companies, not on what is going on elsewhere or am I missing the point?

Because the Eurozone (the european countries that use the euro) is a house of cards. It bonded together inherently unstable countries like Greece and other mainly southern countries with super strong economies like Germany and others in the North. The confidence in the project is that unity will lead to a constant subsidising of the weaker economies. But Greece is a total basket case and refuses to make significant changes and now the stronger economies have had enough. They are cutting the credit as Greece simply refuses to make the reforms demanded (like making more than a token effort to collect tax).

Now Greece on its own is no huge deal. Its economy is tiny compared to the Eurozone, but if it exits the eurozone then the market has no confidence that Europe support other weaker economies and they to will drift toward exit. (this is called 'Contagion' Great Name!) The prime candidates are Spain and Italy, but if they go the whole project will unravel and imo, put pressure on France a huge (but moribund) economy. This will plunge Europe into a HUGE recession which will make 2008 look like a small accounting error and totally tank the european economy.

So the stakes are high. Greece knows the relative strength of its bargaining position given the above scenario and at the mo neither side is blinking. Oh and given that the EU is the largest trading block in the world a recession there will have knock on effects worldwide.

[forummm]

The US is not in anywhere the situation Greece was in. The US maintains its own currency. This allows the dollar to fluctuate with respect to other currencies. This provides the ability for the US to prevent the kind of austerity-induced economic decline that Greece has been forced into by devaluing the dollar if needed, which would increase exports and boost the economy back up. Greece wasn't able to do this. So they had to just keep cutting and cutting government spending. Which kills the economy. Which leads to lower tax receipts. Which leads to more government spending cuts. Which kills the economy. Etc.

The US is not Greece. The dollar has been increasing in strength dramatically because our economy and bonds are so safe.

[nobodyspecial]

Nobodyspecial, all I have to count on is a take on a George Carlin quote: think about how stupid people are, then realize half of them are stupider than that.

On the assumption that the research depts of major financial institutions know more about the risks than you do - they are already priced into the market. The interesting question is, as you point out, do they price in the effect of millions of day-traders sayign "OMG the world is ending sell sell sell" ?

[grantmeaname]

Or are the institutions willing to trade on their convictions? To paraphrase Keynes, "the market can stay irrational longer than I can stay solvent".

[Erica/NWEdible]

I have a feeling were going to hit soon a market correction or we already entering it without even knowing it. It's been at least 2-3 months that the stock market has been about even (maybe with a slight gain), but I have a feeling the next few months will be rough. At least I will be able to take advantage of low prices.

I hate to even say this on the MMM Forums because people will start screaming at me about market timing, but I feel the same way. We liquidated and moved several singleton stocks bought in 2008 into a more conservative/balanced Vanguard fund recently on this "gut feeling." We're also building up a slightly larger than normal cash reserve so that we are in a better position to take advantage of a correction if it happens.

I don't think this is anything comparable to Greece, though. We're just doing the stupid bubble thing...again. ::sigh::

[I'm a red panda]

It makes me think that, what with the happenings in Greece, China, and Puerto Rico, I might wait a week or two to make a Vanguard contribution.

Yeah, it would suck if you accidentally bought while the price is low.

It's not good to time the market, but I think waiting a week would have helped me. Our monthly buy went in on Friday. If it went in this Friday, I think things will be lower.  Even US stocks are reacting to Greece right now.

[Bob W]

They're all using the Euro. So, a hit in one market that devalues it affects them all.

Nobodyspecial, all I have to count on is a take on a George Carlin quote: think about how stupid people are, then realize half of them are stupider than that.

That is great quote!  Reminds of when university professors are asked --- 90% of them believe they are in the top 50% of the educators.   

With regards to Greece -- Yeah -- it is a non event for most of us.   I feel sad for the Greeks.  They are completely screwed for the next 30 years.  They are a country that essentially lives on tourism dollars that makes very little of value.  So 3rd world status here they come. 

With regards to the USA -- Yeah -- we are screwed eventually and are on a similar path as Greece with some remarkable exceptions -- virtually endless supplies of food,  land,  energy,  war machines,  etc...   We are now beginning to make things close to as cheap as China thanks to robotics, computers and cheap energy.

Our problem will be that it will be difficult for us to come to a consensus on how to distribute the massive wealth we have when only 5% of the people are needed to produce all the goods and services we need to live luxurious lifestyles.    So for us, wealth distribution is the big question.   

[regulator]

MWL, I can understand your trepidation coming from the Soviet Union.  I think it is hard to compare a wildly dysfunctional economy (Soviet) to western capitalism, but let's be realistic: no empire lasts forever.  At some point the sun will set on the Merkin empire just as it has on all the others.  When will this happen?  How?  Why?  Who knows.  Frankly, there is relatively little we as individuals can do to prepare for it.  I think the obvious ones are:

- Learn skills and/or a profession that you can pursue elsewhere in the world to earn a living.  Carpentry, plumbing, accounting, whatever.
- Learn some self sufficiency skills.  Learn to cook, do basic repairs on what you own, hunt, fish, forage, sew.
- Have a bit of folding money cash and goods on hand that people would be willing to barter for (food, toilet paper, booze, ammo).
- If you swing that way, a shotgun, simple handgun (centerfire revolver) and a .22 rifle on hand for self protection and hunting would not be a bad idea.

I suppose one could try to have money in Swiss or Belizean bank accounts, or whatever.  If you are a US citizen the reporting requirements and gubmint harassment make it seem not worthwhile.  Better off having some gold on hand if you feel the need.

Mostly I don't worry about it, other than taking some simple precautions that are also useful for a prolonged power outage, bad snowstorm, zombie invasion, etc.  The US prints its own currency and its debt is denominated in same.  That is the easiest way out, albeit it would result in ridiculously massive inflation for USians and probably a global economic depression.  Mostly I figure that if spending gets out of hand the US could simply stop inserting its fabulously expensive military into every corner of the world and save quite a lot of money.

[beltim]

But Greece is a total basket case and refuses to make significant changes and now the stronger economies have had enough. They are cutting the credit as Greece simply refuses to make the reforms demanded (like making more than a token effort to collect tax).

This is a common narrative that is 100% wrong.  Greece has ALREADY cut pensions by 40%, and overall government spending by something like 15%, and is running a surplus - just not a big enough one from the point of view of the rest of Europe.  Greece has even agreed to the amount of the higher surplus that Europeans want - but the Europeans are demanding a specific set of additional spending cuts, while Greece is proposing a mix of spending cuts and tax increases.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/23/europe-is-destroying-greeces-economy-for-no-reason-at-all/

[Chuck]

But Greece is a total basket case and refuses to make significant changes and now the stronger economies have had enough. They are cutting the credit as Greece simply refuses to make the reforms demanded (like making more than a token effort to collect tax).

This is a common narrative that is 100% wrong.  Greece has ALREADY cut pensions by 40%, and overall government spending by something like 15%, and is running a surplus - just not a big enough one from the point of view of the rest of Europe.  Greece has even agreed to the amount of the higher surplus that Europeans want - but the Europeans are demanding a specific set of additional spending cuts, while Greece is proposing a mix of spending cuts and tax increases.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/23/europe-is-destroying-greeces-economy-for-no-reason-at-all/

That's the one-sided account from the Greek point of view. The truth is a lot more nuanced.

Greece has cut pension payments, but they still allow early retirement, for some bewildering reason. They are running a PRIMARY surplus... but a primary surplus is a surplus absent debt payments. This is like saying you have TONS of extra money... before you pay your mortgage. They are not making enough money, and pension payments remain their biggest expenditure by far.

As for crashing their economy "for no reason": The reason is simple. There are no fewer than four major debtor nations in the EU besides Greece. If they observe a largely painless default, they will act in kind. The coming collapse of the Greek banking system IS being engineered, and ISN'T required. But it must happen or else Portugal, Spain and others will be encouraged to also default. 

[forummm]

I think the dramatic austerity that Greece is already experiencing is pretty good motivation for Portugal and Spain to not voluntarily default. And the fact that Greece is probably about to exit the Euro, and experience even more economic maladies will only reinforce that.

But I also think that most of the austerity is unnecessary. Why not just lend to Greece at 0% (the market rate that other EU states can borrow at) for awhile until their economy can start to grow again? All the austerity has crushed their economy. If they can stop the cutting, the economy can heal and grow, tax receipts will grow, and then they will have a growing surplus to rebuild the economy and eventually pay off the debts--or even just a large portion of the debts.

[beltim]

But Greece is a total basket case and refuses to make significant changes and now the stronger economies have had enough. They are cutting the credit as Greece simply refuses to make the reforms demanded (like making more than a token effort to collect tax).

This is a common narrative that is 100% wrong.  Greece has ALREADY cut pensions by 40%, and overall government spending by something like 15%, and is running a surplus - just not a big enough one from the point of view of the rest of Europe.  Greece has even agreed to the amount of the higher surplus that Europeans want - but the Europeans are demanding a specific set of additional spending cuts, while Greece is proposing a mix of spending cuts and tax increases.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/23/europe-is-destroying-greeces-economy-for-no-reason-at-all/

That's the one-sided account from the Greek point of view. The truth is a lot more nuanced.

The opinion, maybe.  The facts aren't from the Greek point of view - they're facts.  So when people say things like "Greece refuses to make significant changes" they're speaking from a position of ignorance.

Greece has cut pension payments, but they still allow early retirement, for some bewildering reason. They are running a PRIMARY surplus... but a primary surplus is a surplus absent debt payments. This is like saying you have TONS of extra money... before you pay your mortgage. They are not making enough money, and pension payments remain their biggest expenditure by far.

So I know Greece has raised the regular retirement age to 67, and has tried to reduce the number of people who take early retirement as well as benefits, but I haven't found good numbers on what the new system is.  Do you have any references for what the current system for early retirement is, or what either Greece or the rest of Europe is proposing for additional reforms?

You're 100% right on the primary surplus.  However, the IMF and ECB usually drastically reduce interest charges in exchange for financial reform like Greece has already made.

As for crashing their economy "for no reason": The reason is simple. There are no fewer than four major debtor nations in the EU besides Greece. If they observe a largely painless default, they will act in kind. The coming collapse of the Greek banking system IS being engineered, and ISN'T required. But it must happen or else Portugal, Spain and others will be encouraged to also default.

The point is that a default isn't necessary.  Europe is forcing a default.

[gillstone]

I’m tempted to go back to the partisan parts of the OP and ask about how much national debt grew from 1981-1993 and from 2001-2009, or how long has it been since a conservative president had a budget surplus (1969) but that would be an unfair use of reality and facts.  Instead I will touch on the Greece vs U.S. comparison.

Let’s put this to bed rather than letting pundits keep us up at night.  We aren't Greece, not even close, not even comparable.

1.   Leading up to the crisis, the Greek government was deeply corrupt:
    a)   Greece cooked their own books to gain entry to the Euro zone by showing artificial surpluses fed by a huge real estate bubble;
    b)   Greek government lacked the equivalent of a Congressional Budget Office to say what things actually cost in the short and long term and the lacked the equivalent   of a Government Accountability Office to actually track what departments got what money to do what work and how it was all authorized by what branch of government.  This meant that whole government departments operated off the books in Greece so when the crisis hit they had no idea how many people were actually on the payroll and how much they were costing.  Part of why austerity was so difficult was because it forced so many off the books “employees” off the payroll;
    c)   Tax evasion is practically national pastime with people paying only a fraction of the taxes that are actually due.  By contrast American tax subscription is remarkably high.

2.   Greece can’t control their own currency or their debt and those are big problems for a small country
     a)The ace in the hole that any government holds is the ability to print currency to pay debts.  If done heavily this can lead to hyperinflation but it can also be done prudently to float an economy through tough times;
    b)   As a member of the Eurozone, Greece can’t print any currency, their currency is set by the ECB and they will not print a bunch of extra Euros to save a country that never should have been in the Eurozone;
    c)   Whereas US debt is predominantly held by US Citizens, Greek debt is largely held by outside nations as part of their ECB bailout packages.  Citizens tend to be more flexible on making debt payments work, outside bankers – not so much.

3.   Greece’s economy is not the scale of the US economy. 
   a)   While Greece has the largest economy in the Balkans, that’s not a very good yardstick.  The gap between GDP of the respective nations is measured in orders of magnitude.  Big nations have more tools and more resources to adapt to changing market conditions and they even get room to rewrite rules in the ways smaller nations don’t.

4.   Greece is out of options besides the most painful, we have lots of options to boost our bottom line.  Because their books were so cooked when it came time to see how it was all working they found out that they were so in the red there were no small measures they could use.  It was steep cuts and high taxes and that’s it.  The US has absurdly low income tax rates and a corporate tax rate that once the loopholes are accounted for is not near as bad as the base rate.  In addition, we spend more on national defense than the next 6 countries combined.  We have a huge menu of options that are simply inaccessible to Greece at this point.  In order to get to the Greek point we would need an event so much larger than the 2008 Crisis that even foreign intervention would not be enough. 
 

[AZDude]

Greek stock market is going to crash, obviously, already down 33% since January. Thinking I should buy in a couple of weeks from now, with some modest amount of money. Anyway to directly invest, or is there a good fund out there?

[KBecks2]

It means I would want to have a decent chunk of cash on hand, and a large pantry of food stored up in case things got crazy.  I would also want to have a paid off home in case we went through serious unemployment and no hope of getting work. 

[KBecks2]

Greek stock market is going to crash, obviously, already down 33% since January. Thinking I should buy in a couple of weeks from now, with some modest amount of money. Anyway to directly invest, or is there a good fund out there?

I would not touch Greece to be honest.  It's too risky and too hard to know what's going on.

[gillstone]

Greek stock market is going to crash, obviously, already down 33% since January. Thinking I should buy in a couple of weeks from now, with some modest amount of money. Anyway to directly invest, or is there a good fund out there?

I would not touch Greece to be honest.  It's too risky and too hard to know what's going on.

Too much volatility to try to time it.  It may collapse much further or it may start to level out but when and by how much is a complete WAG

[beltim]

Greek stock market is going to crash, obviously, already down 33% since January. Thinking I should buy in a couple of weeks from now, with some modest amount of money. Anyway to directly invest, or is there a good fund out there?

You can buy an exchange-traded fund that holds I think the twenty biggest companies in Greece.  The symbol is GREK.

It's really, really hard to buy Greek bonds, though.  I haven't found a way for small investors to do so.

[grantmeaname]

I don't follow.

Europe is forcing a default.

If Greece does everything it promised it would do on the contract that it signed with its creditors, there would be no default. The creditors can only "force a default" by actually enforcing the terms of the contract that they signed after the debtor has defaulted, right?

[AZDude]

I don't follow.

Europe is forcing a default.

If Greece does everything it promised it would do on the contract that it signed with its creditors, there would be no default. The creditors can only "force a default" by actually enforcing the terms of the contract that they signed after the debtor has defaulted, right?

True, but Greece cannot pay its bills. It does not have the cash flow. Whose fault that is can be debated(I have a feeling 99% of the forum will point to Greece itself). The creditors are refusing to renegotiate terms without unpopular economic reform. So you could argue a default is being forced.

[grantmeaname]

I still don't follow. Refusing to renegotiate a contract is not a default. General bad things happening to Grecians is not a default. Greece breaking the terms of its contract is the only thing that is a default.

[arebelspy]

I don't follow.

Europe is forcing a default.

If Greece does everything it promised it would do on the contract that it signed with its creditors, there would be no default. The creditors can only "force a default" by actually enforcing the terms of the contract that they signed after the debtor has defaulted, right?

True, but Greece cannot pay its bills. It does not have the cash flow. Whose fault that is can be debated(I have a feeling 99% of the forum will point to Greece itself). The creditors are refusing to renegotiate terms without unpopular economic reform. So you could argue a default is being forced.

If I stop making my mortgage payments (and let's say I legitimately can't afford it), and ask if the bank will renegotiate my mortgage with me, and they decide not to, are they forcing me to default on the mortgage?

[beltim]

I don't follow.

The point is that a default isn't necessary. Europe is forcing a default.

If Greece does everything it promised it would do on the contract that it signed with its creditors, there would be no default. The creditors can only "force a default" by actually enforcing the terms of the contract that they signed after the debtor has defaulted, right?

Yes, you're right.  Greece made its own bed when it came to running huge deficits, spending too much on generous social services, and not collecting enough tax revenue to pay for it.  Greece is entirely responsible for its substantial debt burden.

However, I reinserted the other sentence that you omitted from the quote.  I maintain that a default isn't necessary, and that it's in the interests of Greece's creditors to avoid a Greek default.

[gillstone]

Latvia had a crisis - they followed the rules, paid their debt and emerged from the crisis intact.
Ireland had a huge crisis - they followed the rules, paid their debt and were the fastest growing EU economy in 2014.
Spain, Portugal, Italy and even France have all stared into the abyss, but managed to make the cuts and keep things moving.

To keep their economy floating, Greece is being forced to leave behind a system of absurdly corrupt patronage that underpinned their economy for decades.  It is so painful for them because the system was so engrained.  Yes ECB standards are high, but clearly so is the risk and those have to balance.  European nations should not be obligated to help Greece keep a system in place that caused its crisis. 

[grantmeaname]

I maintain that a default isn't necessary, and that it's in the interests of Greece's creditors to avoid a Greek default.

If the creditors do nothing Greece will not default?

[arebelspy]

I maintain that a default isn't necessary, and that it's in the interests of Greece's creditors to avoid a Greek default.

If the creditors do nothing Greece will not default?

I think he means it's not "necessary" because there is something that can be done to avoid it--the creditors could negotiate.  And he thinks it is in the creditors' best interest to do so.

Regardless of whether that is true or not, it remains the case that no default is being "forced."

[beltim]

I maintain that a default isn't necessary, and that it's in the interests of Greece's creditors to avoid a Greek default.

If the creditors do nothing Greece will not default?

I think he means it's not "necessary" because there is something that can be done to avoid it--the creditors could negotiate.  And he thinks it is in the creditors' best interest to do so.

Exactly. 

Regardless of whether that is true or not, it remains the case that no default is being "forced."

Yes.  It would have been more accurate for me to say that the creditors are choosing a Greek default instead of negotiating how Greece will improve its balance sheet (note: not the magnitude, just the mechanism).  This is entirely their right, of course, but my opinion is that it is a bad decision.

[grantmeaname]

the creditors could negotiate.  And he thinks it is in the creditors' best interest to do so.

To me this is not a technical difference - your statement is exactly the opposite of the original assertion. In this statement Greece has done something and the creditors are either taking or not taking an action to prevent the consequences of that action. In the original statement, Greece was just doing its thing and the creditors were either taking or not taking an action to inflict consequences on Greece.

Yes.  It would have been more accurate for me to say that the creditors are choosing a Greek default instead of negotiating how Greece will improve its balance sheet (note: not the magnitude, just the mechanism).  This is entirely their right, of course, but my opinion is that it is a bad decision.

Are you comparing negotiation before a technical default and negotiation after a technical default when you're talking about what's in the creditor's best interest? I'm confused about the two options being compared and what the differences are.

[jackiechiles2]

We would print more money and make the payment.  Then, we'd print more money to pay our other obligations.  Greece has no such option since it's a member of the Euro.

[arebelspy]

The creditors are choosing to let Greece default, rather than renegotiating.

That is, of course, their prerogative.

At no point is it the creditors' fault that Greece is defaulting, though they could stop it (by renegotiating) if they wanted.

What was originally stated--a default is being "forced" on Greece--was incorrect.  I think everyone agrees on that.

[beltim]

Yes.  It would have been more accurate for me to say that the creditors are choosing a Greek default instead of negotiating how Greece will improve its balance sheet (note: not the magnitude, just the mechanism).  This is entirely their right, of course, but my opinion is that it is a bad decision.

Are you comparing negotiation before a technical default and negotiation after a technical default when you're talking about what's in the creditor's best interest? I'm confused about the two options being compared and what the differences are.

I don't think so.  I'm saying the creditors have the power to avoid a default by Greece.  The creditors want to avoid a Greek default (as evidenced by their offering a proposal by which Greece can avoid said default).  The creditors are unwilling to accept the mechanism by which Greece has offered to enact the required budget surplus.

[The Accidental Mustachian]

But Greece is a total basket case and refuses to make significant changes and now the stronger economies have had enough. They are cutting the credit as Greece simply refuses to make the reforms demanded (like making more than a token effort to collect tax).

This is a common narrative that is 100% wrong.  Greece has ALREADY cut pensions by 40%, and overall government spending by something like 15%, and is running a surplus - just not a big enough one from the point of view of the rest of Europe.  Greece has even agreed to the amount of the higher surplus that Europeans want - but the Europeans are demanding a specific set of additional spending cuts, while Greece is proposing a mix of spending cuts and tax increases.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/23/europe-is-destroying-greeces-economy-for-no-reason-at-all/

errrr, no its not. Those are not significant changes given its position.

You are not running a surplus if you do not include your foreign debt repayment. (thats a primary surplus) That is simply the economics of la la land. Reducing pensions significantly is not enough when you give pensions out like discount coupons. Particularly when you consider those very same pensions have risen by over 100% in the last 10 years, (paid for by borrowed money of course) so its hardly the horrific measure that it first appears.

Tax collection rates are still ludicrous. It refuses to implement further tax raises, Vat a tax that they could actually collect. I could go on and on. But i stand by my assessment. Greece is a basket case.

Oh and lets not forgot the Greeks have had huge debt relief on the forced haircut that private investors took.

Electing a far left government who refuse to honour the terms of the deal was a disastrous misstep by the Greek people for which they will pay a heavy price. Fortunately they have a chance in the referendum this Sunday to vote for the reform package. Hopefully then the petulant bunch of college radicals who currently run the country will throw their toys out of the pram and exit stage left leaving the way clear for grown up.

[nobodyspecial]

Electing a far left government who refuse to honour the terms of the deal was a disastrous misstep by the Greek people for which they will pay a heavy price.

Remains to be seen. At the moment they are like Wall St in 2008 = bail us out or the entire banking system collapses, thank you ;-)
Greece is saying, throw us out of the euro and Portugal, spain, Ireland will leave - that leaves Germany back in the Euro==Deutschmark days.

It is funny how massive printing of free money (sorry carefully calculated quantitive easing) is the correct answer for USA and UK but harsh austerity measures are the best for everyone else.

[The Accidental Mustachian]

yes, that would be two countries that retained control of their own currency. Everyone knew the danger of entering a currency union. (which is precisely why the UK didn't)  Greece were so keen to join the cooked the books in order to do so. Whinging about the disciplines of that currency union now doesn't really earn on much sympathy.

[gillstone]

Electing a far left government who refuse to honour the terms of the deal was a disastrous misstep by the Greek people for which they will pay a heavy price.

Remains to be seen. At the moment they are like Wall St in 2008 = bail us out or the entire banking system collapses, thank you ;-)
Greece is saying, throw us out of the euro and Portugal, spain, Ireland will leave - that leaves Germany back in the Euro==Deutschmark days.

It is funny how massive printing of free money (sorry carefully calculated quantitive easing) is the correct answer for USA and UK but harsh austerity measures are the best for everyone else.

The threat of other exits was much bigger 5 years ago.  Now that Ireland is emerging from austerity and Spain and Portugal have stabilized the threat of cascading defaults/exits is remote.

An analogy would be that five years ago a good friend came to you saying he was in trouble with loan sharks who would leave pieces of him around town if you didn't help him pay.  You help your buddy but require he get his shit together. 

He came back again just a few weeks ago, he doesn't like the changes he had to make.  He wants the money without any requirements that he improve his behavior enough to exit his situation. And says he needs more money or he'll stop getting loans from banks and may receive a stern worded letter or two.   

[Chuck]

Electing a far left government who refuse to honour the terms of the deal was a disastrous misstep by the Greek people for which they will pay a heavy price.

Remains to be seen. At the moment they are like Wall St in 2008 = bail us out or the entire banking system collapses, thank you ;-)
Greece is saying, throw us out of the euro and Portugal, spain, Ireland will leave - that leaves Germany back in the Euro==Deutschmark days.

It is funny how massive printing of free money (sorry carefully calculated quantitive easing) is the correct answer for USA and UK but harsh austerity measures are the best for everyone else.

That was their leverage back in 2010. That leverage is gone.

There will be no external banking meltdown now. Just a ten year depression in Greece.

[MoneyCat]

The most tragic thing about all this was that I was going to move my Roth IRA away from an expensive high-fee account to Vanguard and now I have to wait for months until the price increases again to the point where I won't take a loss.  *sigh*  Money down the drain.

[forummm]

The most tragic thing about all this was that I was going to move my Roth IRA away from an expensive high-fee account to Vanguard and now I have to wait for months until the price increases again to the point where I won't take a loss.  *sigh*  Money down the drain.

Why can't you take the loss? You're just moving from A to B.

[marty998]

yes, that would be two countries that retained control of their own currency. Everyone knew the danger of entering a currency union. (which is precisely why the UK didn't)  Greece were so keen to join the cooked the books in order to do so. Whinging about the disciplines of that currency union now doesn't really earn on much sympathy.

Everyone is forgetting that Goldman Sachs were the ones that helped them cook the books.

Must have thought it was a brilliant idea hiring GS to "advise" them how to get into the Euro.

Just another client that wakes up several years later to find that they've been dudded by the vampire squid.

[MoneyCat]

The most tragic thing about all this was that I was going to move my Roth IRA away from an expensive high-fee account to Vanguard and now I have to wait for months until the price increases again to the point where I won't take a loss.  *sigh*  Money down the drain.

Why can't you take the loss? You're just moving from A to B.

I don't want to buy high and sell low.  Or in this case, buy low and sell even lower thanks to idiots in Europe.

[TheLazyMan]

The most tragic thing about all this was that I was going to move my Roth IRA away from an expensive high-fee account to Vanguard and now I have to wait for months until the price increases again to the point where I won't take a loss.  *sigh*  Money down the drain.

Why can't you take the loss? You're just moving from A to B.

I don't want to buy high and sell low.  Or in this case, buy low and sell even lower thanks to idiots in Europe.

If you have investment X in account A you can sell it and buy investment X in account B and you haven't lost anything.  What detail is missing here?

[MoneyCat]

The most tragic thing about all this was that I was going to move my Roth IRA away from an expensive high-fee account to Vanguard and now I have to wait for months until the price increases again to the point where I won't take a loss.  *sigh*  Money down the drain.

Why can't you take the loss? You're just moving from A to B.

I don't want to buy high and sell low.  Or in this case, buy low and sell even lower thanks to idiots in Europe.

If you have investment X in account A you can sell it and buy investment X in account B and you haven't lost anything.  What detail is missing here?

The high-fee account wasn't invested in Vanguard funds.

[fb132]

How did you all enjoy seing your funds shrink today,lol. I was looking at my investments and in my TFSA (tax free savings account), just that alone I lost 500$ today and if I combine with my other investments, I am sure I lost over 1K$-2K$. I could only imagine how much some have probably lost alot more today. It was brutal to watch, thank god I am not like some people who panic and sell at moments like these. Can't wait for next week to purchase more ETF's, stocks are for sale big time and it might go lower.