

Ask HN: Will Greece go bankrupt? - bad_alloc

Will Greece be saved by the EU (and/or go bust anyway?)? Will it be thrown out of the Union?<p>What do you believe/know/speculate about the future of Greece and especially the Euro?(I think a lot about this because I do not want to found a startup in a potential european inflation.)
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hga
"If something can't go on forever, it won't" (some famous economist I'm too
lazy to look up).

Of course that says nothing about the timing....

The fiscal policies of Greece are unsustainable. Ditto for some of the PIIGS
(Portugal, Italy, Ireland, Greece, Spain). A bailout without an austerity
program will only delay the end ... that the latter looks somewhere between
unsustainable to a non-starter.

A bailout would be _very_ bad for the Eurozone, since it will increase the
moral hazard for the rest of the PIIGS (well, maybe not Ireland). A failure to
bailout Greece (now or later) will likely put the rest of the PIIGS in dire
straits as their sovereign debt is put into question.

Greece can't make its creditors take an implicit haircut by devaluation as
long as it uses the Euro. In the long run it's hard to see it both keep the
Euro and not give the creditors an explicit haircut, i.e. they won't get all
their money back ... which will make the continued borrowing they need harder
to impossible.

I don't see any prospect for a soft landing.

However as d2viant implies, there's a good change that any of the above
problems can be managed. The world is a rather open place ... things you have
to worry about more than an inflation (which will only happen, at least any
time soon, if Greece goes of the Euro, and then only for Greece) are problems
like currency export controls.

E.g. if you're in Greece, you might find it impossible to pay e.g. Amazon for
AWS services, they might impose controls on your ability to remove money from
the country. On the other hand, if you keep enough of a presence outside of
Greece including payments going into your company and then out to AWS you
might be able to pull it off.

It's all very iffy, we just don't know how the various governments in question
will handle these problems. Be flexible, try to keep reserves for problem,
avoid single points of failure WRT to individual countries. Also don't obsess
on inflation, there's enough deleveraging going on or the potential of that
continued deflation is very possible.

~~~
hga
One minor detail I forgot: European bank exposure to the PIIGS is very
substantial. So giving them a haircut on Greek sovereign debt would be ...
suboptimal (no doubt this is why Germany is playing ball for now after first
saying no). Problem is, there are no good options left at this point.

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bluemonkey
Greece and Spain won't pay back. This was a calculated Risk, and a Lesson for
the Banking System. What is happening in Greece, is a very well orchestrated
show, to get granted €110bn aid, to avert meltdown. The only thing Germans can
do is: REPOSSESS 170 Leopard 2AEX Battle Tanks from Greece, and 190 Leopard
2A6E Battle Tanks from Spain. U.S.A must REPOSSESS 170 F-16 Jet Fighters from
Greece, … the rest is gone with the wind …forever … Greece must stop paying
lucrative pensions with borrowed money, reform the free health care system,
and cut down, 4 times the military budged. Greece’s problem is too much debt.
Greece has a budget deficit of 12.7% of GDP – meaning that the country is
spending 12.7% more than the value of one year’s economic output. Greece is no
different to a serial credit card borrower who can’t pay back his loans. But
just like a serial credit card borrower, as long as Greece keeps relying on
borrowed money to fund itself, the problem won’t go away. It will just get
worse. [http://www.defenseindustrydaily.com/Greece-in-Default-
on-U-2...](http://www.defenseindustrydaily.com/Greece-in-Default-
on-U-214-Submarine-Order-05801/) But don't worry; the ECB, the Fed or both
will print the money. And all of us will share the pain, with our hard-earned
money. Bad is never good until worse happens.

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ozres1
Greece will only be bankrupt if they don't get bailed out again either by the
EU, the IMF or both.

The measures demanded by the IMF & EU (which is necessary for political will &
arguably 'right') will cause the economy of Greece to contract.

There has been much squabbling within the EU about how to structure a loan and
the whole thing has been a mess given differences within the EU.

The stability of the Euro is certainly much on the minds of the Germans given
their experiences with the mark and the loan can be challenged in the German
supreme court if it undermines the Euro.

I frankly wouldn't worry about which way the Euro will go. Especially when
compared to the problems other wealthy nations will face.

------
yt
the corruption in Greece is big that even the smallest government run
department is infected so the only way out for Greece is either to deal with
corruption which I think is impossible the other way to default on the loans
and declare bankruptcy and go back to a devalued the greek dragma around 500
drs to the euro which will help the tours men industry and maybe will stop
importing everything from abroad and start producing I want to go in a store
and see a label made in Greece!!!!!!!!!!! thank

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d2viant
If you have a great idea and think you can build a business around it, do it.
Don't let macroeconomic issues that are out of your control influence your
decision to go for it.

