Quick Economic Question

[mellors]

I know this is probably not the most appropriate place, but I have to ask, people keep saying if Greece doesn't pass austerity it will go bankrupt. Question is....what happens when a country goes bankrupt, does it cease to exist, do they close all the businesses and ship people off to another not bankrupt country!!! Just wondering.

Greece is technically already bankrupt, where it doesn't have the money to pay its bills. Normally a country would print more money to cover the expenses, thus devaluing its currency. As Greece is linked to the Euro they obviously cant devalue.
No all the businesses dont close !

[doodlebug]

Greece is technically already bankrupt, where it doesn't have the money to pay its bills. Normally a country would print more money to cover the expenses, thus devaluing its currency. As Greece is linked to the Euro they obviously cant devalue.
No all the businesses dont close !

Thats what I thought, so basically the country continues, but because of the euro monetary system the EU keeps it running and paying its bills!!! sounds to me like they should just declare bankruptcy and avoid all the riots etc...

[Conrad de Montferrat]

Thats what I thought, so basically the country continues, but because of the euro monetary system the EU keeps it running and paying its bills!!! sounds to me like they should just declare bankruptcy and avoid all the riots etc...

Possible that also the EU will stop paying the bills.
And the riots might get worse.
I feel no pitty for the Greeks

If Greece go bankrupt that mean he cannot pay back its external debts, if Greece was not part of Euro zone is currency will be devaluted and became valuless. But because he is part of the euro zone the rest of euro zone cannot let that happened.
.

Actually the EU can let a bankruptcy happen and in my opinion it should!

Apart from the clear example of Argentia, the defacto reality is that both the US & Japan* are bankrupt- but they're "too big to fail".. Greece will be propped up yet again (just like IRL) but eventually someone has to pay the piper- perhaps the question to ask is- can the Euro continue to exist?- seems Ger & France are determined (for now) to ensure that happens but apart from Ger & the Netherlands, all of the EU is teethering on edge of the sherriff's collection vans- idk where this is leading but I don't think the endgame will be pretty

( national debt is 250% of GDP)

The US is highly in debts but they are only bankrupt if either they decide to stop borrowing further money or stop printing money. The US can and does inflate some of it debts away with the printing press.
Regarding Japan - most of the Japanese debt is hold by the Japanese people - at very very low interest rates.

So the whole world will be bankrupt, owe money to the world bank!!!!! So why don't we just close the world bank, end of third world debt, end of first world debt....is this too simple, or is it just that a few billionaires would lose out?

No the debt structure is really different from country to country - American debt is mainy held by the British, Japanese and the Chinese, Japanese and German debts are mainly hold by their own people.
Not billonaires would lose out if you wirte everything off - but also loads and loads of pensioners, insurances etc.
Furthermore if debt is written off the country wil llose the capability to borrow again for many years to come - which is a problem in case you live beyond your means.

[papa2044]

If Greece defaults its declared bankrupt, it has no money to run the country also unable to pay peoples wages (teachers,doctors,nurses,police,army, and all other civil service workers) and then the Euro Zone is in serious trouble including the rest of the world who invested in Greece and the Euro.........................

[Doozer]

Why dont our creditors cut ireland some slack. I mean ye we fucked up our economy but unlike greece we can be good for it. They know we are broke for now so give us a monotoroum til we are back on our feet and able to pay our debts. Or are france and germany happy to have us arse in the air ready to fuck us hard over our citrate
Corporate tax base

[City Gent]

Given the severity of the Greek sovereign debt crisis, the possibility of default is quite a possible scenario. Other things equal Greece will definitely restructure its debt in the near future, which practically means that the creditors will lose much of their money. This is still the optimistic scenario though, as the pessimistic approach says that Greece will declare default in maximum one and a half years from now (or even earlier if it doesn't receive the next payment from the troika).

Under such conditions, it is interesting to develop some of the possible scenarios that might occur regarding the impact a Greek bankruptcy will have on the euro, on the European Union and perhaps on the global economy. To formulate the possible scenarios we first need to take some real facts into account.

The first parameter that we need to take into consideration is that most of the Greek government bonds are in the hands of German and French investors (banks basically), while a small part is held by Cypriots. In simple words this means that most of the money that Greece has to pay back, will be given to Germans, French and to some extend Cypriots.

Another factor that we cannot omit is that Greece belongs to the eurozone, whereby a failure to save Greece would send all those necessary negative messages to the markets that would convince them that other euro countries such as Portugal and Ireland might easily meet the same fate.

The third fact is that Greece has received the biggest bailout ever to be given to a country (110 billion euro) and if that amount does not prove enough to prevent bankruptcy, then what can?

Given the above facts, the first scenario suggests that a Greek collapse will transmit the crisis to the countries of the creditors who have already started shaking. Hence the problem will multiply geometrically, meaning that a much deeper crisis will come with serious consequences on the integrity of the EU.

The second scenario is that the markets and the speculators (they are the same basically), will be more than convinced that other countries who currently face similar problems with Greece will also be brought on the verge of bankruptcy. Countries such as Portugal, Ireland and even Spain, who will no longer be in a position to fulfill their obligations towards their creditors, since if the markets lose any faith in their capacity to pay back, they will simply not lend them any money, which practically equals bankruptcy. In the parlance of the markets such an occasion will raise the spreads of the government bonds into extraorbitant levels. So either they will have to receive more money from the European Safety Mechanism or declare default. No matter the case the two speed Europe, will become two-tier.

The third scenario is the combination of the above two, which is understandably the worst possible case. The European periphery will practically come to the position where Greece currently stands, while the European center will experience serious shocks, with the ramifications being unpredictable but surely worrisome. At any rate the single currency will collapse and the EU architecture will have to undergo fundamental reforms (extremely difficult) or go down as well. And of course if the EU collapses there is no telling as to what might happen at a global level. Surely something really bad. After all do not forget that the US economy is also in a really bad situation.

No matter the scenario the sure thing is that all will be more or less affected if Greece goes bankrupt. As such the Greek crisis is in fact a European crisis and I personally see no way out of it as things currently stand and with the kind of measures that the European leaders currently have in mind.


CG

[Conrad de Montferrat]

Why dont our creditors cut ireland some slack. I mean ye we fucked up our economy but unlike greece we can be good for it. They know we are broke for now so give us a monotoroum til we are back on our feet and able to pay our debts. Or are france and germany happy to have us arse in the air ready to fuck us hard over our citrate
Corporate tax base

Like Greece Ireland has no significant industry. How does Ireland make money? Some multinationals who can move their operations tomorrow to Poland, some agriculture and tourism. Couple of pharmaceuticals and biotechnology companies (Irish and American/ European) are as well here but not in a critical mass. The finance sector went down before it could grow big.
The main export Ireland is doing is the export of people again - like in the past.


And Ireland still spends more money than it earns. I wouldn't be surprised if the times of the "Irish Tiger" are definitely over.