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Post by Carol on Jun 17, 2015 10:49:42 GMT 1
I'm watching the news about Greece with interest.
In many ways, Greece reminds me of Croatia (or at least Dalmatia): the descriptions of the attitude to paying taxes, the over-large civil service and the general sense of requiring others to pay for their way of life, whilst being very reluctant to make changes to their spending habits and lifestyle.
Unless something happens at the last minute to turn things around, then Greece will be defaulting on its debt payments on Friday and will possibly be effectively being controlled by Germany by the end of the weekend. (Actually just what Hitler tried to do himself!).
Then what? Revolution in Greece, all the other euro members seriously unnerved because they'll either be transferring huge lumps of cash to Greece or worried that they'll be next. All resulting in a major loss of confidence in the euro and falls in European stock markets.
One small consolation for Greece though is that if and when it drops out of the euro, it will be able devalue and its tourism industry will enjoy an enormous boom time.
What about Croatia though? Thank God, it wasn't a EU member earlier or it would have ended up in the euro. Croatia relies on tourism though and it could well do without Greece grabbing say 10-15% of its business this summer. Also, obviously since Croatia is permanently in recession (or does it just feel like that?), problems in its large trading markets (excluding Bosnia) can only make things worse for Croatia.
Very happy to be told that this thinking is flawed and none of this will happen. Anyone??
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Post by Ribaric on Jun 17, 2015 14:28:09 GMT 1
Without too much research, l make you generally right about Greece but I don't really see the Euro will be overtly affected. What is not clear is, following a default, then what? Will Greece just not pay at all? Maybe they will set the new Drachma at one-for-one with the euro and just print their way out of debt? If all this brings doubt to the long term future of the Euro then I can see investors getting jittery but who, if anyone, would be next? Portugal? Spain? I'm guessing the doubt is already there and the current value of the Euro already reflects that level of doubt. It would be the same if Greece and the EU find a settlement, there's still the huge debt so I don't see the Euro changing dramatically in either case.
As for HR, with half the nation locked into Swiss Franc or Euro based mortgages, devaluation of the kuna would be political suicide and that's one thing our esteemed political leaders are unlikely to consider. More likely that pensions and services will be cut (assume we've borrowed to the limit already) and those at the bottom will bear the brunt - not that the press will ever admit it. It's a worry.
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Post by Carol on Jun 17, 2015 16:16:42 GMT 1
If they default then they just don't bother paying. I saw a statistic once that every country in the world has defaulted at some time or other (including the US), but its a really big deal.
Basically, no one trusts them after that and the country finds it can't borrow money at anything other than astronomical levels so then Greece would be just a hop and a skip away from bankruptcy.
It blows a massive big hole in the whole concept of the euro though. The core idea was that all the countries would share the same currency and it would be achievable because the strong would help the weak when needed. That's obviously been happening for seven years now but clearly the Germans think the Greeks are taking the p*** by continuing to overspend and expecting Germany etc to pick up the bill.
So, either the richer countries continue to pay Greece's debts, which often means just paying their own banks money that they lent to Greece in the good days, or they let Greece default and hang itself. But if Greece is left to default, then what happens to the European banks that are owed money by Greece? And what do the other weaker countries think of their chances of getting help should they get into trouble, as per the original deal??
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Post by Carol on Jun 17, 2015 16:30:07 GMT 1
One small consolation: at least we didn't emigrate to Greece 10 years ago and start up A Place in Greece!
I've been really fed up with how long EU accession took for Croatia, but now I am really glad because otherwise Croatia could well be in Greece's shoes today.
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Post by crojoe on Jun 18, 2015 0:20:29 GMT 1
I'm watching the news about Greece with interest. In many ways, Greece reminds me of Croatia (or at least Dalmatia): the descriptions of the attitude to paying taxes, the over-large civil service and the general sense of requiring others to pay for their way of life, whilst being very reluctant to make changes to their spending habits and lifestyle. Unless something happens at the last minute to turn things around, then Greece will be defaulting on its debt payments on Friday and will possibly be effectively being controlled by Germany by the end of the weekend. (Actually just what Hitler tried to do himself!). Then what? Revolution in Greece, all the other euro members seriously unnerved because they'll either be transferring huge lumps of cash to Greece or worried that they'll be next. All resulting in a major loss of confidence in the euro and falls in European stock markets. One small consolation for Greece though is that if and when it drops out of the euro, it will be able devalue and its tourism industry will enjoy an enormous boom time. What about Croatia though? Thank God, it wasn't a EU member earlier or it would have ended up in the euro. Croatia relies on tourism though and it could well do without Greece grabbing say 10-15% of its business this summer. Also, obviously since Croatia is permanently in recession (or does it just feel like that?), problems in its large trading markets (excluding Bosnia) can only make things worse for Croatia. Very happy to be told that this thinking is flawed and none of this will happen. Anyone?? Don't worry Carol, there is no "recession" in Croatia, unless everyone is window shopping. I do sense a bit of change in the air, a bit more positiveness & optimism, people willing to try new things, some major arrivals like water parks, a new international airport (that's actually ahead of the building schedule), more cultural and community events and even plans to rejuvenate some old places like the Velesijam (although I think that idea is one giant white elephant... someones get richer scheme). At least the mayor of Zagreb was let out of prison and things are rolling again (those who stepped in while he was behind bars did nothing ... the city of Zagreb public works came to a stand still). Heck, after his release even my road finally got a proper paving of asphalt after 10 years (although I suspect some utility company will want to install some pipes in the road after summer just to annoy me). Oh. I forgot to mention Burger King just opened it's second location in Arena shopping center ... we just need Dunkin Donuts to know we will survive. |
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Post by Carol on Jun 18, 2015 10:01:05 GMT 1
taken from the World bank's over view of Croatia:-
"Before the global financial crisis of 2008-09, the Croatian economy grew at a healthy 4-5% annually, incomes doubled, and economic and social opportunities dramatically improved. The prolonged crisis is testing this progress, as well as Croatia’s aspirations, as the country is now entering its sixth year of recession, having lost over 12 % of its output."
and
"Gross Domestic Product (GDP) is estimated to fall by 0.5% in 2014. There is more optimism about the prospect for growth in 2015, with exports projected to pick up in the Eurozone and private investments expected to increase."
So, you are right Crojoe that maybe things are picking up, although I'd question whether that new airport (and the other big projects) is coming out of money earned by Croatia as a country.
Personally, I don't think Greece will default on meeting its debt repayments this month. Either the EU / IMF have to buckle or Greece has to, but both sides have got more to lose by not giving way than by doing so. Right now they are having a competition to see who has more courage but something has to give. I think they'll come up with some sort of face saving formula that makes it look like the Greek politicians have got the best possible deal for the Greeks whilst the EU hands over the cash. It may cost a lot of money to the EU, but its nothing to how much money they will lose if they don't pay up.
These are people though, and sometimes people do things that aren't rational because they got hot-headed. If either side throws a strop at this moment, then there will be a massive crisis in Europe by next week and Croatia will be badly hit.
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Post by Carol on Jul 1, 2015 11:15:26 GMT 1
So, Greece defaulted to the IMF last night (or got into arrears - same difference).
I can't decide whether Alexis Tsipras is the wiliest poker player the world has ever seen or an arrogant maniac or even that he's just realised that things had to change and Greece has to get rid of big chunks of that debt one way or another.
Its awfully decent of the Greeks to test the EU in this way though. Now Croatia and the other net recipient countries can discover what the EU's limits are.
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Post by crojoe on Jul 1, 2015 13:09:45 GMT 1
So, Greece defaulted to the IMF last night (or got into arrears - same difference). I can't decide whether Alexis Tsipras is the wiliest poker player the world has ever seen or an arrogant maniac or even that he's just realised that things had to change and Greece has to get rid of big chunks of that debt one way or another. Its awfully decent of the Greeks to test the EU in this way though. Now Croatia and the other net recipient countries can discover what the EU's limits are. Same here... want to see what will happen now they have called the IMF/World Bank/EU bluff. Will it be all down hill or will things improve. The big problem still remains really, they are still part of the EU, most likely no longer paying club fees. Loads has to change within the country before they can expect things to get better. I hear Slovenia is now worse off then Croatia, so lets see what happens. Guess being neighbors With Austria does little to help them be straight laced.. they must have more in common with Croatians then Austrians. |
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Post by ivetron on Jul 1, 2015 18:10:30 GMT 1
At this point Alexis Tsipras can't cave in and subject his country to more austerity. He and his party won the election on a platform of ending the austerity. If he were to cave in to more concessions he would be good as gone in my opinion. There are many leading Economists that believe that Greece should just default, much like Ireland did. With increasing austerity the economy just continues to contract and things just get worse and worse. A default and subsequent return to the Drachma or some other printed currency which should then be devalued as mentioned earlier in this thread would be viable solution moving forward for Greece. How does this affect the EU and global economy? They say that compared to the recent financial crisis of 2008-9 Greece is small potatoes and the EU and overall global financial system is much more insulated and better prepared to deal with something like a Greece default. Now a default by say Portugual, Spain or Italy? That's a much much bigger deal and would be a major issue.
Regarding Croatia, they are one of the worst economic performers of the EU bloc along with Greece and Cyprus and this is well after joining the EU. What a shame. Those of you that live there can probably better comment on some of the following statements. "There are a lot of uncompetitive companies, lots of imported goods. EU funds are not flowing. There is no planning, security, the legal system is not up to EU standards," said an EU diplomat based in Zagreb. "Without serious cuts in public spending there just won't be a better life but the government is showing no ambition to do it," he said.
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Post by crojoe on Jul 1, 2015 20:31:17 GMT 1
At this point Alexis Tsipras can't cave in and subject his country to more austerity. He and his party won the election on a platform of ending the austerity. If he were to cave in to more concessions he would be good as gone in my opinion. There are many leading Economists that believe that Greece should just default, much like Ireland did. With increasing austerity the economy just continues to contract and things just get worse and worse. A default and subsequent return to the Drachma or some other printed currency which should then be devalued as mentioned earlier in this thread would be viable solution moving forward for Greece. How does this affect the EU and global economy? They say that compared to the recent financial crisis of 2008-9 Greece is small potatoes and the EU and overall global financial system is much more insulated and better prepared to deal with something like a Greece default. Now a default by say Portugual, Spain or Italy? That's a much much bigger deal and would be a major issue. Regarding Croatia, they are one of the worst economic performers of the EU bloc along with Greece and Cyprus and this is well after joining the EU. What a shame. Those of you that live there can probably better comment on some of the following statements. "There are a lot of uncompetitive companies, lots of imported goods. EU funds are not flowing. There is no planning, security, the legal system is not up to EU standards," said an EU diplomat based in Zagreb. "Without serious cuts in public spending there just won't be a better life but the government is showing no ambition to do it," he said. And for anyone looking for a quick exit plan these guys just started flying from Zagreb to Toronto (notice the name of the airlines). dalje.com/en-croatia/skygreece-airlines-begins-toronto-to-zagreb-service/548079www.anna.aero/2015/06/30/skygreece-airlines-launches-long-haul-zagreb/ |
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Post by Carol on Jul 1, 2015 22:03:12 GMT 1
I find the whole language around it strange. How can a country decide not to bother with austerity when it is massively in debt?
If you or I are in debt, then we'd have to cut back on my spending to try to pay off the debt, or at least keep up with the repayments. Greece borrowed this money. Did anyone force them to do it?
Then they realised that they'd borrowed too much and so they borrowed more to tide them over, but with a promise that they'd change their spending habits. Then they got some of the debt cancelled and they borrowed even more.
However, they didn't make all the changes they'd promised and now they need to borrow again (for a third time). You'd think that would be humiliating, but instead they think its unreasonable that the organisations that they want to borrow from have their doubts that they'll keep their promise this time or even that they simply won't bother to pay the money back at all?
Why should the rest of the EU pay for Greeks to do as they please? If they want to not bother collecting taxes, treat business like its a dirty word and have people retire in middle age, then that's up to them. But why should the Germans, French, British, Slovaks, Finns etc., etc pay for it?
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Post by ivetron on Jul 2, 2015 0:36:53 GMT 1
Carol, "why should the Germans, French, British, Slovaks, Finns etc., etc pay for it?" I agree. And I'd imagine if you asked any fiscally responsible German person they'd be pretty darn unhappy about propping Greece.
"If you or I are in debt, then we'd have to cut back on my spending to try to pay off the debt, or at least keep up with the repayments". Again, I couldn't agree more. Greece has been living like this for god knows how long. Fat government, big pensions, early retirement, cronyism and probably a poor work ethic but who knows. I don't think Croatia is too much different. Hard to change systems, corruptions that have been in place for decades.
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Post by Carol on Jul 2, 2015 14:37:59 GMT 1
If I had to put a bet on it, I'd bet that:
Alexis Tsipras is used to getting his own way, and does not have much experience of failing. He is a political operator who uses a combination of charm, guile and bullying to get what he wants. He has tried to hold the other EU leaders to ransom knowing how much they love the "EU project" (as they call it) and how much they don't want it to start to disintegrating on their watch.
However, he forgot that the other EU leaders are all successful politicians too. They also are used to getting their own way and they each learned how to play dirty as they made their own ways up the greasy pole in their own countries.
When Tsipras tried to play politics with them, they reverted to type and, probably for the first time ever in the history of the EU , the various country leaders and finance ministers properly united with each other in a common goal. Unfortunately, for Tsipras their common goal is seeing to it that Tsipras is banished.
Either way will suffice: The Greeks can leave and take him with them or they can dump him and come back to the fold.
If I am right, then they have already won because Tsipras is now a dead man walking, politically speaking.
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Post by Carol on Jul 3, 2015 14:07:42 GMT 1
IMF has waded in. I am wondering if the IMF are quite angry with the EU for letting Greece default?
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Post by Carol on Jul 3, 2015 14:12:59 GMT 1
"
tourism, the engine of the Greek economy, has also taken a huge hit with an estimated 50,000 holidaymakers cancelling bookings every day. The Greek Tourism Confederation (SETE) announced that bookings were down by 40% in the last few days following the government’s decision to hold a referendum at what will shortly be the height of the tourist season."
Those tourists will be looking around for a new destination. Ditto the people who would have gone to Tunisia but now won't.
I know its not nice to be seen to be picking over the carcass, but surely Croatia could do with some extra tourist business? Now is the moment to pay for advertising if you have unsold weeks in your villa or apartment!!!
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