Greece Votes Communist

[jejo68]

If they hand out 10 drachma to the Euro, they will suddenly have lots of liquidity in the country. Do they have an economy? No. I suspect most are not willing to create anything of value. The economy will slowly grind to a halt, liquidity or not. With a hard cut onimports they will gain some self sufficiency. The big hit will be to consumer abundance.

The EU banks have probably had their Greek gamble payed out. They cannot lose. Crisis just make their potential winnings bigger.

I'll bet you a dollar that the Greeks issue the Novus Drachma at 1:1 and it falls to 1:10 (and then worse).

just for the reference. The Danish kr is 7.5kr to 1 euro. So a 1:10 ratio is way to optimistic.

[airboy]

Greek Banks are projected to run out of Euros today.  It is highly doubtful if the European Central Bank will issue a line of credit with no credible negotiations or offer on the table.  They would also have to physically ship Euros to Greek Banks.

The Greek Government "promised" that they would get a new agreement on much better terms from the EU by the end of the day on Tuesday.   

The leaders of Germany and most of the other EU nations realize that if they bail out Greece that their voters will remove them from office in the next election.  The EU will not come to the rescue of Greece at the price of the jobs of the elected officials.

What is probably going to happen is a complete Greek banking meltdown in the next 72 hours.  The Greek government will issue IOUs (script).  Then, all bank deposits and all Greek government debts will be redone on a 1 drachma to 1 Euro ratio.  The Drachma will immediately devalue with financial press estimates of 1:25 to 1:50 - but it is a guess.  Almost all imports to Greece dry up.  [This is just an expansion of what Longblade already posted].

The key decision makers in Europe will not bail out Greece at the cost of their own jobs.  The Greek Leadership has poisoned the well and the EU leadership does not trust them.  What we are seeing is a debacle like the last Argentina meltdown when they unpegged the Peso from the Dollar - but a lot worse.  It will probably also be worse than the meltdown in Iceland.

[LongBlade]

What is probably going to happen is a complete Greek banking meltdown in the next 72 hours.  The Greek government will issue IOUs (script).  Then, all bank deposits and all Greek government debts will be redone on a 1 drachma to 1 Euro ratio. 

On the plus side, Greek good are going to get cheap very fast for the rest of us.

If they can maintain political stability it will be a heyday to go on vacation there.

[Mr. Bigglesworth]

Figs, olive oil, feta. Are there any high value products made in Greece?

You are probably right on the 1:1 initial valuation. It strikes me that if they know there will be heavy devaluation,  they would try 10:1 to head it off. People float a cost of goods in their head. After years of austerity, getting large amounts of cash could encourage spending. It's psychological. At 1:1they will try to hoard until they see it dropping in value, then they suddenly switch to dumping cash for goods. It's a whiplash effect. At 10 :1 out of the gate, with Euro prices in their head, they may be willing to spend. That might keep things stable longer.

[mirth]

Mmmm...cheap Feta

[Atilla60]

He he, I'm not too keen on feta either. Even if it's free, but how about cheap Uzo?

[mirth]

I love a good feta and Uzo.

[Atilla60]

Feta and Uzo?

Together?

Never tried that combo, but I guess the Uzo kind of takes the top of the creamy sensation

[airboy]

On the plus side, Greek good are going to get cheap very fast for the rest of us.

If they can maintain political stability it will be a heyday to go on vacation there.

I don't know.  We have a Med cruise starting in Athens in mid-September.  We go to only one Greek stop after Athens that we care about - Crete.  But if the idiot Greeks have waves of strikes at transit points or if they riot so much it becomes impossible to travel - we could lose the trip.  My wife would be furious.

[Mr. Bigglesworth]

But hey, they got a congratulations from Fidel. All must be good for them now.

[LongBlade]

On the plus side, Greek good are going to get cheap very fast for the rest of us.

If they can maintain political stability it will be a heyday to go on vacation there.

I don't know.  We have a Med cruise starting in Athens in mid-September.  We go to only one Greek stop after Athens that we care about - Crete.  But if the idiot Greeks have waves of strikes at transit points or if they riot so much it becomes impossible to travel - we could lose the trip.  My wife would be furious.

That's the catch. If the Greeks don't cooperate then their biggest quick win will go right out the door.

[airboy]

The only thing important in the Greek crisis that happened today was:

"the European Central Bank decided Monday not to expand its life support for the Greek lenders, raising the prospect that they could be out of money by Wednesday absent an ECB reversal. That could force Greece off the euro..."

The Central Bank is not supplying additional Euros for Greek Banks, those who hold funds in Greek banks, etc...

The EU is also readying a plan for emergency food and medical supplies to Greece because, surprise surprise, the Greeks cannot feed themselves or produce most medicines.  Without Euros, they can't import anything.

Everything else that happened today was irrelevant to the situation.

[Airborne Rifles]

Looks like the Greeks have offered an appropriate gift to the ECB to try to resolve the conflict: an equine statue!

http://www.thedailymash.co.uk/news/international/greeks-apologise-with-huge-horse-2012051527146

[endfire79]

What is probably going to happen is a complete Greek banking meltdown in the next 72 hours.  The Greek government will issue IOUs (script).  Then, all bank deposits and all Greek government debts will be redone on a 1 drachma to 1 Euro ratio. 

On the plus side, Greek good are going to get cheap very fast for the rest of us.

If they can maintain political stability it will be a heyday to go on vacation there.

I've put off my wife's requests to go there for 4 years, you just gotta stick to your gut feeling sometimes ;).  After talking with my dad's family there, I decided I'd wait  a year or two after the dust has settled.  My uncles in and around Athens said it was the first time since the 50's that they had seen empty shelves at a grocery store. 

On the other side, one of my cousins works at a bar on Amorgos in the Aegean. Things are nicer the farther you are away from the capital (where the headaches are). 

[Barthheart]

Looks like the Greeks have offered an appropriate gift to the ECB to try to resolve the conflict: an equine statue!

http://www.thedailymash.co.uk/news/international/greeks-apologise-with-huge-horse-2012051527146