Forum Post: Greek Default
Posted 13 years ago on Oct. 24, 2011, 10:30 p.m. EST by dudleydw
(48)
This content is user submitted and not an official statement
If Greece is allowed to write off their debt why can't the USA write off our debt? The main reason our standard of living is falling like a rock is our onerous debt burden.
every part of this statement is wrong
How so?
greece didn't write off their debt, and when they do it's not going to be happy fun times, look at russia or argentina or iceland and their currency crises.
debt burden isn't lowering out standard of living, especially since our debt is at low low rates now. the reason for the recent fall is because we just had an economy based on a fantasy that needs to re-adjust back to reality. the long term stagnant wages are a debatable topic and something i would relate primarily to crony capitalism (government and corporations exchanging favors and power), including the over-financialization of the economy that system has led to.
Are you a banker, (You want your money back), there is a direct relationship between Debt to GDP and living standards.
WHEN Greece defaults the ish is gonna hit the fan.
Its not about if they do, or how they do it. Think Differently Change the conversation to why> Who did this and how can they fix it... The Money is not got it just changed hands and it needs to go back to Greece and the other countries that were stole from
Who did this: Greece and its people (not fiscally conservative enough?), Goldman Sachs (which helped Greece join euro area perhaps with bad? financial statements), creditors to Greece (who might have behaved like pushers giving drugs to the drug addict hoping for a big payoff), EU lacking fiscal control over Greece (Maastricht treaty was deficient?). How to fix it: 1. Greece defaults on some or all of its debts. 2. Greece's creditors "voluntarily" forgive some or all of Greece's debts. 3. IMF, ECB ride as white knights to the rescue with oodles of money. 4. EU core countries strong-arm EU members to cough up money and ride to the rescue. 5. EU "shores up" its stabilization fund with more created euros. 6. Greece sues Goldman Sachs to recover some token amount of money. 7. severe austerity measures on Greece (already being done and may not work well any more due to their driving Greece's economy into contraction). 8. Greece asset sale. 9. any or some combinations of the above. Then either 10. Greece restructures its debts, leaves the EU, and brings back the drachma. or 11. EU re-evaluates and amends its governance of its members to enforce fiscal conservatism.
You should not automatically assume that the money had been "stolen" from Greece and the other countries. It is much more likely that Greece did not have the competitive edge to earn the money back or Greece was just too spend-thrift. Greece was probably abusing its privilege of being in euro area such that it borrowed at favorably low interest rates and overspent. Greece staying in euro area means it needs to pay the French banks, for example, with euros which for Greece is really too strong a currency. Greece needs currency devaluation but its using euros precludes that.
The banking cartel, dirty part of capitalism.
Greece may still be saved by white knights such as the IMF, ECB, etc. but most likely Greece's creditors will still have to get really disgusting haircuts because Greece's debts per capita or per GDP are so onerous. For the U.S., there may be an anti-inflationary argument against printing money to pay off our debts but we are NOT paying our debts fast anyway so how could it be causing our standard of living to fall like a rock? Perhaps you are referring to our private debts being paid off but isn't it a GOOD thing that the people in the U.S. are digging themselves out of the mess?
Greece isn't "writing off" their debt. The other member countries of the European Union are bailing them out. Do you imagine they are happy about that?
All this world wide debt creation is the reason the party will shortly come to an end.
Greece may really to have to default because their debt is so high relative to their GDP. There is absolutely NO reason why the USA would want to default on our debt because our debt, unlike Greece's, is denominated in U.S. dollars. The U.S. controls the creation of U.S. dollars so how much do you want, creditors? The U.S. can pay it ALL back by printing the money. Yes, there was the S&P downgrading the U.S. but that is really about the U.S.'s totally stupid, irrational, and suicidal lack of political understanding or will or both, or simply playing partisan game next to a cliff. Greece's debts, on the other hand, had to be repaid in currency NOT controlled by Greece so it cannot print the currency to get out of its problem.
A little bit of knowledge is a dangerous thing. A hard default is refusal to pay your creditors, or inability to do so. Sure lets default by currency depreciation as you propose, the final outcome will be the same.
Printing money is NOT necessarily currency depreciation. How much money will be worth will depend on the conditions at that time so if the U.S. has soybeans and China's people crave their pork, the U.S. can charge huge amount of U.S. dollars to sell soybeans to China (in the case of global warming causing widespread droughts in other agricultural countries other than the U.S.) so that China can feed their pigs.
At the time of widespread droughts, vast amount of U.S. dollars may become absolutely necessary for China to pay its soybean bill for feeding their pigs. It is NOT exactly the U.S. deliberately devaluing its currency but it is rather due to the shifting of the market supply and demand.
Do you have any resource to back up your claim that our standard of living is falling as fast as you say?