Greece

Is Greece in a position even to pay the interest on its loans? I don't know but I would guess not.

The Independent 7 July 2015
Almost all the money owed by Greece has been used to pay off its lenders, with only 10 per cent of it going to the Greek people, according to the Jubilee Debt Campaign.

Guardian 29 June 2015
Only a small fraction of the €240bn (£170bn) total bailout money Greece received in 2010 and 2012 found its way into the government’s coffers to soften the blow of the 2008 financial crash and fund reform programmes.

Most of the money went to the banks that lent Greece funds before the crash.

Less than 10% of the bailout money was left to be used by the government for reforming its economy and safeguarding weaker members of society.

Guardian 29 June 2015
Greece took out a costly loan from the troika to pay back the banks and investors who had lent to the country in the run-up to 2008. The second bailout, in 2012, did involve some debt write-offs for bondholders; but not enough to make its finances manageable.

..... The troika believed that its reform recipe – spending cuts, tax increases, labour market liberalisation – would restore the Greek economy to growth and help make its debts sustainable.

Instead, the country has been plunged into five years of recession, and its debt-to-GDP ratio has continued to rise, from 120% of GDP, to 175%.

The radical Syriza government was elected precisely because Greek voters could see the heavy price exacted in exchange for the “rescue” they had been offered – much of which went straight back out of the door to repay the private sector creditors that had lent recklessly to Athens in the first place.

Many of the poor American families who emerged from the credit crisis with impossible-to-pay mortgages received a debt write-off, with their irresponsible lenders bearing the cost. And in the UK more recently, payday lender Wonga was forced to write off a swath of loans that had been made to borrowers without the means to pay.

You're saying the 90% of the loans went to pay off other loans?

That's not right surely?

Yes, we know Greece is borrowing and in debt, what if it borrowed this money (and of course it did) please can someone tell me what it's done with it all?

Money Morning states that Greece is $352.7 billion in debt to the International Monetary Fund, the European Central Bank and other creditors - a figure that is more than 175% of its GDP. This was for an aid package it received during the 2008-2009 global financial crisis. In other words, it was "quantitive easing" - pouring money into European banks to avoid a financial collapse that was primarily caused by European/US banks' irresponsible, unethical and often illegal practices.

According to Money Morning, Japan, Italy, Portugal and Ireland also have very high debt to gdp ratios. Because of the debt incurred in many Eurozone countries, including Greece, the European Central Bank implemented a further "quantitive easing" programme recently. In other words, the whole financial situation is teetering on the edge of disaster, not just in Greece, but throughout Europe - and the US.

Greece owes a lot of money to foreign countries but nowhere near as much as the USA. US public debt as at March 2015 reached $13.08 trillion, over 50% of which is owed to China and Japan (so, in effect, Japan is suffering a high debt to gdp ratio which would presumably be partly improved if the US paid back what it owes but who would dare demand that, in order to repay its debts, the US implement the extreme austerity measures that are being demanded of Greece.

The Independent states that only 10% of the money Greece received actually went to the Greek people. Almost all the money owed by Greece has been used to pay off its lenders. It has been said that the IMF should never have loaned the money to Greece in the first place when over 90% was being used to bail out European financial institutions.

In 2010, developing countries on the IMF Board argued that banks should share in the cost of the crisis they had been instrumental in creating and that some of the debt should be cancelled out. Unsurprisingly, being less powerful countries, they were ignored.

I cannot for the life of me see how impoverishing, de-skilling and totally demoralising a country to the point where suicide levels have increased by 40% and the incidence of HIV by 200% enhances the reputation of the EU as a responsible and supportive body that a country would be proud to belong to.

It would seem that Spain used its €41 billion loan wisely.

2014 has been ‘an economic renaissance’ for Spain, as GDP is expected to grow 1.4 percent, the highest in the eurozone, says Spanish Prime Minister Mariano Rajoy.

“2012 was a year of budget cuts for our country, 2013 a year of reforms, 2014 of an economic renaissance, and 2015 will be a year of an economic takeoff,” TASS quotes Rajoy talking to his conservative Popular Party.

The breakthrough is expected to come on the back of a 0.25 percent increase in pensions, and a 0.5 percent rise in minimum wages, which will be coupled with zero inflation and lower income tax, the Prime Minister explained.

In 2014 an estimated 71,500 new firms were created in Spain, and the number of unemployed started to fall for the first time in 8 years, Rajoy said.

Spain’s unemployment sees one of the sharpest drops on record

“…exports of Spanish goods grew to 34 percent of GDP, which is second only to Germany in Europe, and in terms of foreign investment the Kingdom is the Europe’s leader,” the Premier added.

Spain started 2014 without the eurozone bailout for its banks that managed to get it back on a ‘sound footing’ within a year. Overall, Spain received about €41 billion in rescue funds from Europe.

And hasn't Spain successfully come through a period of austerity?

Yes, someone please answer the question.

At least when the NI Celtic Tiger bubble burst they had the infrastructure in place to try and rebuild their economy - and a good job they've done of it too.

Perhaps his new finance minister is going to come up with a miracle or two.

But if they left the EU, where would they get any money from? Their banks are practically cleaned out. Austerity won't be the word for it! There will be no pensions at all!

Tsipras is an idiot.

I can understand the concept of 'speculate to accumulate' and even agree that it can be successful. So ....????

Didn't notice Greece refusing the loans so what did it invest the money in which its citizens were practising austerity? What did it establish, build, create, spend its billions on while it had the chance? Did its economy grow?

Can someone please answer the question?

Where did the money go?

This idea that you can compare personal finance and a country's finances is so misleading. When we were the hardest up ever after WW2 we established the NHS and the welfare state, and built more council houses. The result was the economy grew. Austerity is not the answer to Greece's problems. One wonders why the rest of Europe is so reluctant to even allow Greece to try another way. Could it be that it suits the more affluent nations to have a 'poor relation'?

Exactly!

If the theoretical person had been so profligate as to squander all the money he/she had been lent and is unable or unwilling to make a reasonable offer to pay off the debt, what is the lender supposed to do? Loan him/her even more money, ad infinitum...?

Where has all the borrowed billions gone?

If Greece were a person it seems to me that that person is now expected to agree to becoming an indentured labourer who has no hope of ever paying back the debt that he owes to his master and who is therefore, effectively, not much more than a slave.

I can't find the words to express how absolutely disgusted I am at the way Europe is treating a fellow member.

Here's a perspective on the Greek debt, compared with the bank bailouts that taxpayers have funded. Their debt is minor in comparison.

www.facebook.com/YesClydesdale/photos/a.416462901809143.1073741838.208476852607750/742943769161053/?type=1

True. Where are the Onassis type people? They used to be by words in wealthiness. Money stashed somewhere?

Lending to someone/a country with no chance of the borrower re-paying the loan seems daft, yet that's what has happened on more than one occasion with Greece.

I love Greece and have visited the same village for almost 10 years so have made some friends there. We were told last year that austerity meant teachers were payed 600 e a month and teaching hours halved. Doctors were facing similar cuts in salary but working very long hours. The number of doctors at the local hospital has been halved in order to save money. The doctors have gone to Germany where they're earning e6000 a month, a much larger salary than they could ever hope to earn in Greece currently.

Our media is reporting that pensions are around e500 a month, so slightly less than our basic state pension.

Youth unemployment is now over 50% whilst it's 7% in Germany.

I'm not defending the Greek government that my friends tell me "lied" in order to get into the euro but it seems terrible that so many hard working Greek people are suffering stress, anxiety and poverty. Yes I know there has been a tradition of tax evasion and it seems to me that as in most other countries, the poor are being punished whilst the wealthy continue to avoid tax in all manner of clever ways.

Agreed Gracesgran that we may not share a common sense of what common sense means!

To me it is common sense not to lend money to someone who is unlikely to be able to pay it back and then be amazed when they default.

It seems to me that it is not common sense to borrow money if you do not have the means to pay it back and wonder why the lender isn't too happy.

But I've said 'to me' so I am only expressing my own opinion and the facts of the matter are somewhat more complicated.

Let's hear it for common sense!

Your common sense may not be mine though Anya. You may think that which I consider to be common sense absolute stupidity and vice versa. What everyone most needs to be aware of, in my opinion, is the belief that they are the only holders of common sense ... always a bit worrying when people believe they have the received truths and no one else does

It looks as though the govt would have done it, but not without general backing so that they stayed in power, which they didn't get. Not surprising really, as the measures would be unpopular.

See my link of 07-Jul-15 11:50:03 Jane10 or rather, the two links on the page that my link goes to. They take some reading, but it does show what austerity measures the Greek Government was prepared to agree to.

Read in this week's Sunday Times:
"many voters....were undecided or confused about what they were voting for: the question on the ballot paper is complicated and runs to 74 words"