I am coming to the believe that Greece should sell some of the islands (not Corfu!)to Germany (as has been suggested) and wipe the debt clear and start again. Is their an another solution? Loans are all very well but can Greece cannot the huge repayments?
Europe will bail out Greece because most of the money Greece owes is to European banks - all the rest is just politics and public relations...seems to me that it is not betting shops that never lose, but banking!
Message posted by kerkyralover on 29 April 2010 at 6:31pm - IP Logged
I hope all this talk of economic doom and gloom and 'junk' status of the Greek finances does not affect the price of my daily fixes of Mythos. I know tax evasion is a national hobby taken very seriously by all who participate and subject of immense pride and status at the local cafenions. Maybe this is why our beloved Greece is in this mess? BUT does it mean rising prices for the tourists or cheaper Mythos on the grounds of all the austerity the Greeks are being put under. Guess I'll find out soon enough
Message posted by Lavinia on 29 April 2010 at 9:13pm - IP Logged
There have been so many economic scandals in the past few years in Greece involving high profile figures such as senior politicians and churchmen as well as businessmen. The only way out of this crisis to my mind is to make those high profile people who have been found to be corrupt pay, and pay economically. After all, this new government has inherited the mess created by their predecessors and it is the last government who should be paying for the "fine mess" they have got us into. I was really shocked by the price of petrol when I filled up my small "eco" car last week - from 35 euros to 50 euros in a month. This is going to have an enormous affect on prices generally - including (I am afraid) Mythos beer! I am obviously not an economist but don't believe Greece is alone in her difficulties. Spain, Portugal, Ireland (and dare I say) the UK are also in dire straits.
Message posted by windmill on 29 April 2010 at 10:00pm - IP Logged
Greece: why did its economy fall so hard?
With Greece's economy in desperate trouble, Harry Wallop explains how the country got into such a mess.
By Harry Wallop, Consumer Affairs Editor
Published: 4:54PM BST 28 Apr 2010
Comments 18 | Comment on this article
Greece has long lived beyond its means and spent much of the last two centuries defaulting on its debts. Joining the euro was meant to put an end to all that. However, it merely seems to have exacerbated its problems.
It was no surprise to any economist that the European Union, at first, refused to allow the country to join the euro when the new currency started in 1999.
Quite simply, its debts were too high and inflation was out of control. By 2000, the EU finally allowed it to join, though there were suspicions at the time that Greece was operating a "limbo dance" – squeezing its figures to hit the stringent euro criteria, only for them to flip back to dangerous levels once it had entered. Indeed many believe Greece simply lied about its figures to gain entry.
At the time its inflation was 4 per cent, much higher than the European average, and was suffering from one in ten people out of work – a higher figure than currently in recession-hit Britain.
By joining the euro, however, it suddenly enjoyed substantially lower interest rates, because the it was able to borrow in euros. Whereas during the 1990s, Greece had frequently had to pay out 10 per cent or more (18 per cent in 1994) to borrow money, its rate fell dramatically to 3 per cent or 2 per cent.
Ben May, Greek economist at think tank Capital Economics, said: "Their mistake was to go out, borrow money and use it to fund huge wage growth, rather than pay down its already substantial debts."
Greece went on a spending spree, allowing public sector workers' wages to nearly double over the last decade, while it continued to fund one of the most generous pension systems in the world. Workers when they come to retire usually receive a pension equating to 92 per cent of their pre-retirement salary. As Greece has one of the fastest ageing populations in Europe, the bill to fund these pensions kept on mounting.
Tax evasion, endemic among Greece's wealthy middle classes, meant that the Government's tax revenues were not coming in fast enough to fund its outgoings.
Hosting the Olympics in 2004, which cost double the original estimate of €4.5 billion, only made matters worse.
By the start of this year Greece's debt had hit €300 billion, more than the entire value of its annual GDP. This is unlikely to fall quickly, as its current budget deficit – how much its borrowing exceeds tax receipts – is running at 13.6 per cent of its gross domestic product, twice the Eurozone average.
Things have come to a head because the international rating agencies have cut Greece's credit rating, concerned that it will default on its debts. This has the immediate effect – just as when a credit agency cuts a consumer's rating – of pushing up the cost of its borrowing, setting off a vicious spiral.
Quote: Originally posted by Greekwife on 29 April 2010
Would it be advisable to move any money in accounts in Greece immediately ?
I don't really think this is required as Greek banks did not make risky investments. It was only a few years ago that mortages became available. Unlike UK banks, they didn't buy bad debts and declare them as assets to increae the value of the company (on paper).
Christopher Humphry's article was a rehash of his father John's earlier article, nothing new at all.
Yes prices have gone up, but whilst I am sorry for the tourists who will lose their cheap drinks, I am sorrier for the ordinary Greeks who are paying prices for many things which are similar to those in UK but managing to support families in far lower salaries. A good salary for an experienced and well qualified professional in many field is 1300 Euros a month- how many people in UK have to pay rent and support a family on that kind of money?
They are paying for their government's mistakes, and remember it is not only Greece- four countries are known as the PIGS- Portugal,Ireland, Greece and Spain- and they may soon be joined by others- wait until the full costs of the 2012 Olympics are revealed.
In the meantime all we can do is get on with things and manage as best we can, and hope that those in charge now know what they are doing.
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