Greece puts Bailout Plan to Vote (11.11.01: Dow falls nearly 300 points on fear of Europe blow-up)

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    Nov 01, 2011 8:55 PM GMT
    It's a pretty high stakes gamble, but I think it's the right move. The Greeks should be given the choice of what to do - given that irrespective of what happens it means years of hardship. I am a bit skeptical that they will fully understand the implications of their choice but I think that letting them choose is the right decision - even if it provides for an example to other countries and their people.

    http://latimesblogs.latimes.com/money_co/2011/11/dow-falls-nearly-300-points-on-fear-of-europe-blow-up-.html

    Dow falls nearly 300 points on fear of Europe blow-up

    U.S. stocks were pounded for a second day as Europe's government-debt crisis took yet another turn for the worse.

    The Greek prime minister’s surprise call for a national referendum on the country’s European bailout plan triggered selling in equity markets worldwide, leaving the Dow Jones industrial average down 297.05 points, or 2.5%, to 11,657.96 at the closing bell.

    After Monday’s 2.3% slump, the Dow now has given back all of last week’s 3.6% surge, and then some. The index is at its lowest level since Oct. 20.

    Broader market indexes also plunged in heavy trading. The Nasdaq composite dived 2.9%; the Standard & Poor’s 500 sank 2.8%.

    Greek Prime Minister George Papandreou’s shocking decision late Monday to call a referendum on the bailout raised the risk of a thumbs-down by austerity-weary Greek voters. That could mean the end of Greece’s membership in the Eurozone -- and a disastrous default on all of the country’s heavy debt obligations to the rest of the continent.

    Global financial markets’ response was visceral because “we thought we had this thing put to bed,” said Phil Orlando, chief equity strategist at Federated Investors in New York.

    Some investors ran for the cover of U.S. Treasury bonds, driving the 10-year T-note yield to 1.98%, down from 2.11% on Monday and the lowest since Oct. 5.

    Stocks had pared their losses at midday after Socialist lawmakers in Athens said they opposed the idea of a referendum, raising doubts that it could get through parliament. But Papandreou’s spokesman reiterated that the government intended to press ahead with the referendum.

    Whether Papandreou’s government will survive, however, remains a critical question. It is likely to face a confidence vote in parliament later this week. If the government falls the Eurozone’s rescue plan might still be thrown into doubt.

    In European trading Tuesday, equity markets suffered another mini-crash after their October rally. Italian stocks dived 6.8%, the French market lost 5.4% and the Spanish market slid 4.2%.

    Yields on Italian government bonds jumped again, with the 10-year bond yield rising to 6.19%, up from 6.09% on Monday and nearing a new 52-week high. Rising Italian yields show investors are increasingly doubtful about the broader financial rescue plan that European leaders approved last Thursday.
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    Nov 01, 2011 9:34 PM GMT
    If they're in the European Union, they should do what the union wants. They signed up for the program, after all. And if Greece goes, I have a feeling world economies will topple like dominoes.
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    Nov 01, 2011 9:40 PM GMT
    I recently ushered a delegation of Greeks through an international conference and am convinced that they still don't know what debt is. They caused us to waste so much money and in the end weren't satisfied, made redundant decisions, and then charged everything to their own credit cards even though they were still footing the previous bills. It is impossible! They're doomed. They won't even accept a 50% debt write-off???
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    Nov 01, 2011 9:42 PM GMT
    wvufan87 saidIf they're in the European Union, they should do what the union wants. They signed up for the program, after all. And if Greece goes, I have a feeling world economies will topple like dominoes.

    Looking at the countries that are most exposed to Greek debt, the ones that weathered the last financial crisis appear to still be unexposed. I think it could play out similarly...
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    Nov 01, 2011 9:45 PM GMT
    God forbid, democracy is rearing it's ugly head. What EVER shall we do?

    The only "crisis" here is fewer $$$ in the pockets of greedy financial speculators should this go through as planned.

    Anyone that does not support the Greek austerity referendum does not support democracy.

    I applaud their elected officials for standing up to these unelected and unaccountable banks and international money cartels.

    Our politicians here could take a lesson or to from this.
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    Nov 01, 2011 9:48 PM GMT
    The whole European continent is exposed to Greece, because if it defaults, Portuagal and Italy could tank. Italy is the one country that makes life tenuous in the Euro zone.
  • DCEric

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    Nov 01, 2011 9:51 PM GMT
    BAMF saidGod forbid, democracy is rearing it's ugly head. What EVER shall we do?

    The only "crisis" here is fewer $$$ in the pockets of greedy financial speculators should this go through as planned.

    Anyone that does not support the Greek austerity referendum does not support democracy.

    I applaud their elected officials for standing up to these unelected and unaccountable banks and international money cartels.

    Our politicians here could take a lesson or to from this.


    *facepalm*

    Democracy means you elect your government. It does not mean you vote on individual issues.
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    Nov 01, 2011 9:51 PM GMT
    BAMF saidGod forbid, democracy is rearing it's ugly head. What EVER shall we do?

    The only "crisis" here is fewer $$$ in the pockets of greedy financial speculators should this go through as planned.

    Anyone that does not support the Greek austerity referendum does not support democracy.

    I applaud their elected officials for standing up to these unelected and unaccountable banks and international money cartels.

    Our politicians here could take a lesson or to from this.


    Yeah those oppressive banks who pushed them into spending icon_rolleyes.gif The referendum was the right thing to do - I think it's important for Greeks to pull the trigger. If they make the wrong choice - which my guess, is that they will and there is no bailout, then they will serve as a good example to other countries - but at least they will know that they were the authors of their own fates.
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    Nov 01, 2011 9:51 PM GMT
    DCEric said
    BAMF saidGod forbid, democracy is rearing it's ugly head. What EVER shall we do?

    The only "crisis" here is fewer $$$ in the pockets of greedy financial speculators should this go through as planned.

    Anyone that does not support the Greek austerity referendum does not support democracy.

    I applaud their elected officials for standing up to these unelected and unaccountable banks and international money cartels.

    Our politicians here could take a lesson or to from this.


    *facepalm*

    democracy means you elect your government. It does not mean you vote on individual issues.


    I think a republic votes their representative, and a democracy votes on every issue. When you have a country as big as the United States a democracy cant and wont work.
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    Nov 01, 2011 9:53 PM GMT
    DCEric said*facepalm*

    Democracy means you elect your government. It does not mean you vote on individual issues.


    Given the implications of the bailout package - don't you think that it's a good idea that it be put to a vote? Either way, this will have ramifications for decades.
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    Nov 01, 2011 9:55 PM GMT
    riddler78 said
    BAMF saidGod forbid, democracy is rearing it's ugly head. What EVER shall we do?

    The only "crisis" here is fewer $$$ in the pockets of greedy financial speculators should this go through as planned.

    Anyone that does not support the Greek austerity referendum does not support democracy.

    I applaud their elected officials for standing up to these unelected and unaccountable banks and international money cartels.

    Our politicians here could take a lesson or to from this.


    Yeah those oppressive banks who pushed them into spending icon_rolleyes.gif The referendum was the right thing to do - I think it's important for Greeks to pull the trigger. If they make the wrong choice - which my guess, is that they will and there is no bailout, then they will serve as a good example to other countries - but at least they will know that they were the authors of their own fates.


    So you are saying that the very people affected by the decisions of large, influential, shady, unelected and unaccountable international money cartels and private corporations should have NO say in the decisions being made?

    Methinks perhaps if you were in the same place, your dismissal of the function of putting it to a democratic would not come so hastily.

    The people of Iceland voted to give the finger to these predatory banks and the IMF and are better off for it.

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    Nov 01, 2011 10:05 PM GMT
    BAMF said
    riddler78 said
    BAMF saidGod forbid, democracy is rearing it's ugly head. What EVER shall we do?

    The only "crisis" here is fewer $$$ in the pockets of greedy financial speculators should this go through as planned.

    Anyone that does not support the Greek austerity referendum does not support democracy.

    I applaud their elected officials for standing up to these unelected and unaccountable banks and international money cartels.

    Our politicians here could take a lesson or to from this.


    Yeah those oppressive banks who pushed them into spending icon_rolleyes.gif The referendum was the right thing to do - I think it's important for Greeks to pull the trigger. If they make the wrong choice - which my guess, is that they will and there is no bailout, then they will serve as a good example to other countries - but at least they will know that they were the authors of their own fates.


    So you are saying that the very people affected by the decisions of large, influential, shady, unelected and unaccountable international money cartels and private corporations should have NO say in the decisions being made?

    Methinks perhaps if you were in the same place, your dismissal of the function of putting it to a democratic would not come so hastily.

    The people of Iceland voted to give the finger to these predatory banks and the IMF and are better off for it.



    Please re-read my post. I have stated quite explicitly that the referendum is the *right* way to go. You're right - the people of Iceland, decided to effectively let their banks go under and they *are* better off for it - which isn't to say they haven't suffered either. The Greeks will suffer greatly whether or not they choose to approve this bailout but it should be by their own hands.

    Expect in this case to see all the Greek banks fail and other banks elsewhere given that France had to bailout Dexia. That's what the rest of the EU objects to - that this means they will have to bail out other banks and their banks are being held hostage to Greek voters... but I don't have any sympathies for this argument either given that these banks had a fiduciary duty to their depositors and shareholders and they failed spectacularly when they invested in Greek bonds given how irresponsible practically everyone knew the Greeks were.
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    Nov 01, 2011 10:24 PM GMT
    Greece and Iceland aren't comparable. The Icelandic government was taking the hit for irresponsible bankers, both domestic and international, but the crisis was triggered by foreign governments (e.g. UK). The Greek government and citizens, on the other hand, are completely responsible for their own mess and are holding other countries hostage while they fumble.

    Regarding Iceland's size, representative democracy = direct democracy, i.e. referendum. Every process in Greece leading up to this fiasco has been democratic. They have to be responsible for what has happened through representative democracy. It's their own fault if they allow corruption in their system.
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    Nov 01, 2011 10:53 PM GMT
    riddler78 said
    Yeah those oppressive banks who pushed them into spending icon_rolleyes.gif .


    You dont actually believe those banks did NOT use psychological marketing techniques to get people to loan as much money as possible in order to gain as much power over their capital as humanly possible?

    In other words.. you actually tink those banks were run by people that were not looking to manipulate others for their own interests?

    Don't you think that's a little naive?
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    Nov 01, 2011 10:54 PM GMT
    kandsk saidGreece and Iceland aren't comparable. The Icelandic government was taking the hit for irresponsible bankers, both domestic and international, but the crisis was triggered by foreign governments (e.g. UK). The Greek government and citizens, on the other hand, are completely responsible for their own mess and are holding other countries hostage while they fumble.

    Regarding Iceland's size, representative democracy = direct democracy, i.e. referendum. Every process in Greece leading up to this fiasco has been democratic. They have to be responsible for what has happened through representative democracy. It's their own fault if they allow corruption in their system.


    Point of clarification - the Greek government and its citizens *are* responsible for their mess but I would argue that it is governments and banks elsewhere who are responsible for enabling them. This is the cost for their mistakes.
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    Nov 01, 2011 10:55 PM GMT
    Can we get rid of the Euro already.. That thing has ben NOTHING BUT TROUBLE FROM THE START... i cant think of a single advantage Ive had with that damn coin.... other than needing to change money less... but honestly.. the return I got from not having to pay for changing simply was not worth what moving to the euro meant in my loss of buying power and the general economy for European colonies in the region
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    Nov 01, 2011 10:55 PM GMT
    GreenHopper said
    riddler78 said
    Yeah those oppressive banks who pushed them into spending icon_rolleyes.gif .


    You dont actually believe those banks did NOT use psychological marketing techniques to get people to loan as much money as possible in order to gain as much power over their capital as humanly possible?

    In other words.. you actually tink those banks were run by people that were not looking to manipulate others for their own interests?

    Don't you think that's a little naive?


    Um no - they didn't - though you have confused the lending to the Greek government (which is what is at stake) with consumer lending which is entirely different.
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    Nov 01, 2011 11:03 PM GMT
    riddler78 said
    kandsk saidGreece and Iceland aren't comparable. The Icelandic government was taking the hit for irresponsible bankers, both domestic and international, but the crisis was triggered by foreign governments (e.g. UK). The Greek government and citizens, on the other hand, are completely responsible for their own mess and are holding other countries hostage while they fumble.

    Regarding Iceland's size, representative democracy = direct democracy, i.e. referendum. Every process in Greece leading up to this fiasco has been democratic. They have to be responsible for what has happened through representative democracy. It's their own fault if they allow corruption in their system.


    Point of clarification - the Greek government and its citizens *are* responsible for their mess but I would argue that it is governments and banks elsewhere who are responsible for enabling them. This is the cost for their mistakes.

    Okay, but one more point, to be fair. icon_smile.gif Didn't the Greek government lie for years about their books, tricking banks and foreign governments into thinking they were a safe investment? (I honestly wasn't paying attention but I think that came to light a few governments ago.)
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    Nov 01, 2011 11:28 PM GMT
    kandsk said
    riddler78 said
    kandsk saidGreece and Iceland aren't comparable. The Icelandic government was taking the hit for irresponsible bankers, both domestic and international, but the crisis was triggered by foreign governments (e.g. UK). The Greek government and citizens, on the other hand, are completely responsible for their own mess and are holding other countries hostage while they fumble.

    Regarding Iceland's size, representative democracy = direct democracy, i.e. referendum. Every process in Greece leading up to this fiasco has been democratic. They have to be responsible for what has happened through representative democracy. It's their own fault if they allow corruption in their system.


    Point of clarification - the Greek government and its citizens *are* responsible for their mess but I would argue that it is governments and banks elsewhere who are responsible for enabling them. This is the cost for their mistakes.

    Okay, but one more point, to be fair. icon_smile.gif Didn't the Greek government lie for years about their books, tricking banks and foreign governments into thinking they were a safe investment? (I honestly wasn't paying attention but I think that came to light a few governments ago.)


    I'd have more sympathies if for instance, they actually performed a real audit on Greece before bringing them in the first place. They didn't didn't look too hard and even when Greece admitted their numbers were fudged in 2004 - (2004!) these institutions and governments could have sold Greek bonds and held the Greek government accountable. Instead they waited.

    They didn't deal with their problems and kept pushing the ball forward. Even today - look at this report: http://www.eubusiness.com/news-eu/greece-imf-finance.bys - "EU-IMF audit suspended as Greece admits budget overshoot" They still seem completely disinterested in figuring out the extent of the problem as if it will some how go away.

    This is an attitude that they've taken with all the other countries as well - each of the governments is attempting to point fingers at each other while the ship sinks. The first (possibly the 12th or 15th or 35th but who's really counting?) wake up call to really deal with problems should have been at the same time of the US financial crisis. The dirty secret about the AIG bailout was that it was more about bailing out European banks than it was about the US financial crisis. Europe squandered their "breathing room" and now they are paying for it...

    You know sort of like how there remain many here in total denial over entitlement spending in Medicare and Social Security. The longer we put that off in the West, the worse the problem will get.

    For a more detailed look at how bad things got and how early they knew, check out Michael Lewis' article in Vanity Fair:

    http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010
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    Nov 01, 2011 11:42 PM GMT
    Fuck Greece. Fuck Greece in the ass (that joke just never gets old).

    Seriously, just stop whining. The Greek government paid a bank to doctor their books so they could be accepted into the euro rather than staying on budget. Now comes the seven lean years.
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    Nov 01, 2011 11:46 PM GMT
    riddler78 said ...You know sort of like how there remain many here in total denial over entitlement spending in Medicare and Social Security. The longer we put that off in the West, the worse the problem will get. ...

    Many here are deluding themselves by believing the differences between the US and Greece make any comparisons irrelevant. The common threads are the entitlement mentality, big government, high taxes, disincentivizing business, and the power and influence of unions on government. Basically, spending beyond your means eventually comes home to roost.
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    Nov 01, 2011 11:52 PM GMT
    I can recognize the need to respect the people's decision. But I'm sure many are still thinking how wise that decision to go into disorderly default could be. After all, the people of Greece have proven themselves to be, to put it crudely, lazy and demanding with high expectations and low willingness to contribute. It seems to me like a convenient opportunity to not take responsibility for their past actions, without regard to future detriment.

    It is also a very convenient way for the government to relinquish the blame on them from both sides and pin it down to just the Greek citizens.

    Also, since the Greek economy is ultimately still tied to the Eurozone, the government should recognize that the decision of the people affects not only the people themselves but also the all the Eurozone countries. Moreover, it has already received TWO bailouts (albeit without success) and the government's current stand to let the chips fall where they may sends a highly uncooperative and unappreciative message to the Eurozone.

    Since Greece is already part of the Eurozone (although it definitely doesn't deserve to be), it is its responsibility to contribute to the collective stability of the Euro - this implies that domestic democratic ideals may have to be somewhat constrained by broader goals. And since the Eurozone admitted Greece, they have a responsibility to ensure that what the Greece government is doing does not further detriment them - i.e. kick them out or stop this nonsense.

    To be honest, I see it as letting a spoilt child have his way out of respect for his will. Not sure if what information I have is fully accurate, or whether I've overlooked anything, though.
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    Nov 02, 2011 12:07 AM GMT
    TheChrisGuy saidI can recognize the need to respect the people's decision. But I'm sure many are still thinking how wise that decision to go into disorderly default could be. After all, the people of Greece have proven themselves to be, to put it crudely, lazy and demanding with high expectations and low willingness to contribute. It seems to me like a convenient opportunity to not take responsibility for their past actions, without regard to future detriment.

    It is also a very convenient way for the government to relinquish the blame on them from both sides and pin it down to just the Greek citizens.

    Also, since the Greek economy is ultimately still tied to the Eurozone, the government should recognize that the decision of the people affects not only the people themselves but also the all the Eurozone countries. Moreover, it has already received TWO bailouts (albeit without success) and the government's current stand to let the chips fall where they may sends a highly uncooperative and unappreciative message to the Eurozone.

    Since Greece is already part of the Eurozone (although it definitely doesn't deserve to be), it is its responsibility to contribute to the collective stability of the Euro - this implies that domestic democratic ideals may have to be somewhat constrained by broader goals. And since the Eurozone admitted Greece, they have a responsibility to ensure that what the Greece government is doing does not further detriment them - i.e. kick them out or stop this nonsense.

    To be honest, I see it as letting a spoilt child have his way out of respect for his will. Not sure if what information I have is fully accurate, or whether I've overlooked anything, though.


    Not sure what you're arguing. Either way, the Greeks will be forced to pay for their past profligacy. The markets are falling now because this introduces an element of uncertainty. If the Greeks vote against this deal, it means that they default. The issue isn't so much in the money they already got, but the fact that they still need to keep borrowing and if they haven't made good on their past debts, lenders will be unwilling to buy more of their bonds going forward to fund their massive deficits.

    It also means that there will be a number of banks that will find themselves insolvent because they were lazy and kept lending Greece more money in hopes of getting a few more points in interest. They lent despite the risks - and these weren't unsophisticated managers either. They also bear responsibility and if Greece defaults they will be left with something close to nothing - or at least a lack of certainty as to when Greece will ever repay their debts.

    Greece will then be forced to spend entirely what they earn. How novel.
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    Nov 02, 2011 12:14 AM GMT
    I'm going to do my little bit to help the Greek economy by ordering a Greek Salad with tomorrows dinner.. I think if everyone did the same it might make a difference. icon_biggrin.gif
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    Nov 02, 2011 12:56 AM GMT
    riddler78 said
    TheChrisGuy said



    Not sure what you're arguing. Either way, the Greeks will be forced to pay for their past profligacy. The markets are falling now because this introduces an element of uncertainty. If the Greeks vote against this deal, it means that they default. The issue isn't so much in the money they already got, but the fact that they still need to keep borrowing and if they haven't made good on their past debts, lenders will be unwilling to buy more of their bonds going forward to fund their massive deficits.

    It also means that there will be a number of banks that will find themselves insolvent because they were lazy and kept lending Greece more money in hopes of getting a few more points in interest. They lent despite the risks - and these weren't unsophisticated managers either. They also bear responsibility and if Greece defaults they will be left with something close to nothing - or at least a lack of certainty as to when Greece will ever repay their debts.

    Greece will then be forced to spend entirely what they earn. How novel.


    However, if he was going to make the agreement with his European partners contingent on a referendum in Greece, this should have formed part of the negotiation and agreement, not be thrown into the mix a week later. I think the rest of Europe has a right to be quite annoyed that they were not informed about this sooner.