Can someone explain the importance of GREECE? Please?

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    May 11, 2010 1:52 AM GMT
    I see it in the news when I watch and I listen to what they say about the Greek debt...I watch and listen as they show pictures of civil unrest over governments austerity moves, I hear that German Chancellor Angela Merkel 's ruling party lost their majority in election over the support of bailing out Greece, but she is still in power. I am still kind of lost as to why the imploding of the Greek economy is such a big deal on the stage of the world economy? They certainly are not the monster economy of China or the USA, or Germany or Japan or France or many other nations...Can someone tell me why they matter so much to Wall Street and all the other markets of the world? No disrespect to the Greeks, I just don't understand....I would think that the Greeks would have outrageous inflation issues like so many other nations that have been forced to re-value their money...but drag down the entire world economy? What am I missing?
    Thanks.....icon_eek.gif
  • Mepark

    Posts: 806

    May 11, 2010 2:10 AM GMT
    It's one of the oldest and most important civilizations in the history of humanity. Anything from philosophy to astronomy to architecture can be traced back there, so it's failure or success can translate to anywhere else in the world.
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    May 11, 2010 2:17 AM GMT
    I'm wondering the same thing. Honestly I haven't really been paying much attention to any of it either though I heard a little about Spain and Portugal also being borderline in a financial mess as well.
    There was an interesting newspaper article on why the German people are so pissed off about bailing them out because as most people know the Germans are very hard workers etc etc etc whereas in Greece it seems there's not the same attitude at all. They have very early retirements in comparison. They've been running the country on credit to pay for all the perks basically and it's come home to roost.
    No doubt the USA and Canada will also be sending dollars over there to prop them up which doesn't sit well with me.. It's a different story when there's a natural disaster but when it's bad bookeeping and an attitude of entitlement we're helping save we should keep our money over here.
  • Webster666

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    May 11, 2010 3:17 AM GMT
    It produces some of the finest looking men in the entire world.
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    May 11, 2010 3:40 AM GMT
    Greece is part of the European Union. If their economy tanks, then other EU nations will have to step in and loan money. And I'm sure that will affect the overall value of the Euro as well.
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    May 11, 2010 4:42 AM GMT
    xrichx saidGreece is part of the European Union. If their economy tanks, then other EU nations will have to step in and loan money. And I'm sure that will affect the overall value of the Euro as well.


    Which would be a win for us? am I wrong?
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    May 11, 2010 4:52 AM GMT
    a GAY man asking about the importance of Greece ... icon_rolleyes.gif
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    May 11, 2010 4:54 AM GMT
    xassantex said a GAY man asking about the importance of Greece ... icon_rolleyes.gif


    Unfortunately, I've heard from Greeks that it's a very homophobic culture. Go figure.
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    May 11, 2010 4:59 AM GMT
    xrichx saidGreece is part of the European Union. If their economy tanks, then other EU nations will have to step in and loan money. And I'm sure that will affect the overall value of the Euro as well.


    OK...and this would drive the value of the Euro down I would assume....which would make them a better/more affordable place for a better exchange on the dollar? The dollar is relatively more valuable against the Euro...right?......still not seeing how this drags the world economy and wall street down into a depression...though.....is Europe a major importer of US products? Would it affect their ability to purchase US made products? Is that a very big part of it?...still WORLD-wide? still thinking on this.....and economics was NOT my forte' in school....
  • tokugawa

    Posts: 945

    May 11, 2010 9:53 AM GMT
    xGromitx said
    xrichx saidGreece is part of the European Union. If their economy tanks, then other EU nations will have to step in and loan money. And I'm sure that will affect the overall value of the Euro as well.


    Which would be a win for us? am I wrong?


    Possible reasons this may not be a win for us:

    1. U.S. banks hold lots of Greek debt. If Greece defaults on this debt, U.S. banks are in trouble,

    2. A default in Greece would cause investors to lose confidence and to want to put their money in a safe place, like short term U.S. government debt (still the safest investment in the world). This will cause further decline in the U.S. stock market.

    3. If Greece defaults, they will be less able to buy U.S. goods, and U. S. exporters will lay off workers due to reduced demand,

    4. Countries currently in economic trouble, like Spain and Portugal, may also default if the world economy worsens, which would further drag down the world economy.

    5. If the world has another major economic downturn, which could happen if this thing snowballs out of control, it would be a lose-lose situation for everybody.

    ***

    The announcement of a $1 TRILLION stimulus package in Europe is good news for the Greek economy, good news for the European economy, and good news for the world economy.

    ***

    More info on this topic at:

    http://www.nytimes.com/2010/05/07/opinion/07krugman.html
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    May 11, 2010 11:32 AM GMT
    well, the banks that lent them money would be out...and might even fail, which would disrupt the financial system....and could begin a ripple effect.
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    May 11, 2010 12:07 PM GMT
    here you are my little sunflowers

    http://edition.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html

    greece has been a very bad, bad boy.
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    May 11, 2010 12:37 PM GMT
    Caslon14000 saidwell, the banks that lent them money would be out...and might even fail, which would disrupt the financial system....and could begin a ripple effect.

    Meh, nah. Most of the money that was lent, is from central bankers - mostly France and Germany. They are just trying to save the euro which I personally think is not salvageable particularly given how difficult/unreliable European governments are at controlling their deficits. From the NYT:

    02marsh-image-custom1.jpg


    Megan Mcardle from the Atlantic has a good overview today of why the arguments for a bailout are unconvincing - and a temporary bandaid at best:

    http://www.theatlantic.com/business/archive/2010/05/greek-bailouts-what-are-they-good-for/56499/:

    I'm glad, of course, that Greece is not triggering a second round of global financial crisis. But this doesn't solve any of the core problems that Greece has, which are:

    1. A monetary policy wildly unsuited to its economy
    2. A rapidly aging population which expects to be taken care of by fewer-and-fewer young people
    3. A massive tax compliance problem
    4. Government employees who think that their jobs and benefits are not merely a good thing for them to have, but something akin to a natural right
    5. A long history of fiscal shenanigans

    The austerity package solves only one of these problems; the rest remain. And will get worse in the coming years. Maybe the bailouts are enough to make up for the monetary problem. But I still don't see what the rest of the euro zone is getting out of it.


    Of course others, believe differently and here are some other articles that have been crossing my blog reader:

    "Euro bailout. Now banking risk morphs into geo-political risk" http://www.bbc.co.uk/blogs/newsnight/paulmason/2010/05/euro_bailout_now_banking_risk.html

    "The Welfare State's Death Spiral" http://www.realclearpolitics.com/articles/2010/05/10/the_welfare_states_death_spiral_105503.html

    "Europe is unprepared for austerity"
    http://us.ft.com/ftgateway/superpage.ft?news_id=fto051020101531051380

    This bailout is merely pushing the problems out. There are concerns that the crisis will spread to the rest of the EU, but this isn't because of Greece. I agree with Dr. Jeffrey Miron who is a prof at Harvard who argues:

    http://jeffreymiron.com/2010/05/contagion/

    If other countries have their debts under control, why should markets worry just because one small country is in trouble?

    The better explanation for what looks like “contagion” is that many countries face unsustainable debt burdens, and the situation in Greece spurred markets and rating agencies to recognize this fact. Everyone is now more aware that many of the world’s economies have been consuming more than they can produce and face the real prospect of a lower standard of living.


    What I can't figure out is why the Americans are joining in on the bailout which is subordinated (lower in repayment schedule) than the regular sovereign debt. The people who bought the original sovereign debt recognized the risks of buying bonds from a country that has next to no fiscal discipline. You could even say this isn't about saving the Euro but bailing out the bond holders... Personally I think they should have let Greece fail.
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    May 11, 2010 1:13 PM GMT

    Greece, in and of itself, is unimportant. But it has symbolic value. It has reminded everybody that sovereign risk is a very long way from bullet proof. As a result, people are taking an overdue hard look at government borrowing everywhere - in other European countries, in American municipalities and states, etc, etc. And they don't like what they're seeing. Heads have been in the sand for much too long about unsustainable deficits. There is also the matter of opacity as there was when Bear Stearns, AIG and Lehman got in trouble back in 2008. Nobody really knows who is on the hook by potential defaults by governments. Even if you know who is holding bonds issued by say Greece or the City of Detroit, you still don't know how many jerks built credit default swaps etc on the back of the original bond.

    Even with the EU's huge bailout plan, you haven't heard the last of sovereign debt worries. Not by a long shot. My hunch is that this one will dwarf any financial crisis we've seen yet.
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    May 11, 2010 1:41 PM GMT
    It just proves what a fuck up the SEC (single European Currency) is! icon_cool.gif
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    May 11, 2010 1:51 PM GMT
    xGromitx said
    xrichx saidGreece is part of the European Union. If their economy tanks, then other EU nations will have to step in and loan money. And I'm sure that will affect the overall value of the Euro as well.


    Which would be a win for us? am I wrong?


    Well since it's not a football match.. 'winning' is slightly irrelevant. Plus, if the Euro devaluates, it's going to be tough for Euro countries to import products with a different currency. Which eventually means that every major exporting country will see the effects of a crashing currency.
  • rnch

    Posts: 11524

    May 11, 2010 3:31 PM GMT
    makes me glad that my relatives immigrated to the good ol' U S of A a longgggg time ago! icon_cool.gif

    as for greece...fuck 'em! icon_wink.gif
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    May 11, 2010 3:36 PM GMT
    rnch saidmakes me glad that my relatives immigrated to the good ol' U S of A a longgggg time ago! icon_cool.gif


    Erm... these structural deficits as a result of new entitlement spending mean that it will not be easy for the US to avoid the welfare state debt spiral:

    http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532490

    In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis—so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

    The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

    Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.


    And it's not the US but the US is about to put up a whack load of money to support the bailout - from today:

    Germany, France May Hurt AAA Ratings in ‘Ponzi Game’
    http://www.bloomberg.com/apps/news?pid=20601087&sid=an9qwBhKmH9s

    Germany and France are among top- rated euro-area states that may compromise their AAA grades by standing behind the debts of weaker members with their 750 billion-euro ($955 billion) stabilization fund.

    The package is “making debt profiles deteriorate, potentially damaging the ratings of core sovereigns,” said Stefan Kolek, a strategist at UniCredit SpA in Munich. “It’s a kind of Ponzi game at the highest level.”
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    May 11, 2010 4:04 PM GMT
    southbeach1500 said
    riddler78 saidthe welfare state debt spiral


    In a nutshell, that's it.

    The socialist European states are waking up to the fact that the grand welfare society is ultimately unsustainable.


    HAHA.. we live in countries. C-O-U-N-T-R-I-E-S.
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    May 11, 2010 4:19 PM GMT
    Webster666 saidIt produces some of the finest looking men in the entire world.


    Most important reason stated above.
  • NashRugger

    Posts: 1089

    May 11, 2010 4:22 PM GMT
    greece3.jpg
  • rnch

    Posts: 11524

    May 11, 2010 4:25 PM GMT
    riddler78 said
    rnch saidmakes me glad that my relatives immigrated to the good ol' U S of A a longgggg time ago! icon_cool.gif


    Erm... these structural deficits as a result of new entitlement spending mean that it will not be easy for the US to avoid the the welfare state debt spiral:

    http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532490

    In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis—so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

    The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

    Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.


    And it's not the US but the US is about to put up a whack load of money to support the bailout - from today:

    Germany, France May Hurt AAA Ratings in ‘Ponzi Game’
    http://www.bloomberg.com/apps/news?pid=20601087&sid=an9qwBhKmH9s

    Germany and France are among top- rated euro-area states that may compromise their AAA grades by standing behind the debts of weaker members with their 750 billion-euro ($955 billion) stabilization fund.

    The package is “making debt profiles deteriorate, potentially damaging the ratings of core sovereigns,” said Stefan Kolek, a strategist at UniCredit SpA in Munich. “It’s a kind of Ponzi game at the highest level.”


    Erm, riddler.......your continued cutting and pasting of artlicles from various biased, agenda orientated webistes and posting them here as YOUR replies does NOT make you intelligent or a Policical Pundent...it just makes you too lazy to think on your own. icon_rolleyes.gif
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    May 11, 2010 4:26 PM GMT
    southbeach1500 said
    lespaysbas said
    southbeach1500 said
    riddler78 saidthe welfare state debt spiral


    In a nutshell, that's it.

    The socialist European states are waking up to the fact that the grand welfare society is ultimately unsustainable.


    HAHA.. we live in countries. C-O-U-N-T-R-I-E-S.


    Sheesh... You haven't read much about international relations. The terms "state," "country" and "nation-state" are used interchangeably.

    But you're cute, so all is forgiven.


    first of all, thank you.

    second of all, The European Union being a variety of countries, makes it more difficult and thus more understandable ;)
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    May 11, 2010 4:33 PM GMT
    Sporty_g said What am I missing?
    Thanks.....icon_eek.gif


    The Euro zone countries have quite a few interlocking debt agreements. Greece has the weakest economy and so is viewed as the canary in the coal mine.

  • OptimusMatt

    Posts: 1124

    May 11, 2010 4:34 PM GMT
    In true American Ignorant fashion...sheesh. The euro is valued higher than the greenback. It was introduced as a way to compete with the greenback for the eurozone (among other reasons, of course).

    The problem is not Greece itself - the idea behind creating the euro was to ensure that a system of checks and balances were in place for member countries to ensure that this EXACT scenario did not occur. It was meant as a way to homogenize and stabilize volitile european economies with the backing of the stable ones.