mrstickball said: routsounmanman said: SamuelRSmith said: I would post something more than this, but what I have to say would probably come off as very cold... so, I'm not going to. (Unless you really want me to ). Go ahead. I'm not wearing earplugs and as I've already stated, i'm no expert in economics. Could someone with some knowledge on the subject enlighten me, why is it so bad to default? Could there have been another way, other than resorting to the IMF for help? Why are things so bad now, we've been running deficits for decades now. Some would say that defaulting is the good, albiet ultra-painful, way of getting out of the mess: http://www.forbes.com/2010/04/29/greece-bailout-default-opinions-contributors-jeffrey-a-miron.html Here is an explanation of why things are the way they are: http://www.imakenews.com/ingim01/e_article001744143.cfm Essentially, Greece may have lied about their deficits to join the Eurozone. Now that everything is out in the light, investors, and external parties aren't putting up with Greek stupidity of having massive deficits, and forcing them to make a choice as to how they are going to fix their situation. As a libertarian, for my ideologies, it really comes down to the fact that Greece has too many public sector employees with very favorable wages, and not enough private citizens paying the kinds of taxes needed to sustain the employees. Greece should have made a choice - either reduce government workers and throw the nation into unemployment temporarily - or ensure that revenue meet expenses by levying incredibly painful taxes on people that make money. Deficit spending is showing itself to be the Achilles heel of liberal democracies around the world. There is only so much debt that can be accrued before you have to pay the piper.   Since I know your a private citizen of Greece, that pays taxes and does a lot of great work, I will certainly be praying that you, personally, can make it out of this mess. Although its very sad to see Greece go through this, it may be a net benefit if other countries like Spain, Portugal, the UK and the US learn from your mistakes and get their houses in order before its too late to avert their own Greek catastrophe.

So, if I get this correctly, in the short term, defaulting is not that bad. In the long term, you lose total credibility, noone loans you any money, stocks and bonds drop, and since you are all on your own, harshly increasing taxes is the only way to prevent the deficits!

In the end though, are things any different now? I really don't think the measures taken will make our corrupt government and economy to recover; unemployment will rise, people will burst in anger, and the deficits will at best stabilize. All I see is increasing taxes, while there should be a major public sector slash. As I've said, we have 8x public sector employees than the United Kingdom, and they are even bloated as it is!

Moreover, nothing is done to prevent tax escape (I don't know the economics terms for this) and corruption, thus increase in taxes will affect only the lower classes, which are already suffocating >_>

Sometimes I really think we should just leave the EU, or at least revert to our old currency. The only benefits we've had so far are lower interests on loans (which are quite high, mind you) and lower import prices, which is offset by greedy importers.

PS: Our clergy is considered public sector employees and paid by our ridiculous taxes. Cutting off the church should be our top priority.

@Akvod -

That may be a reason, but don't forget that the recession of 1937 only lasted a year, and that the economy had begun expansion in 1938, while the government was spending LESS that same year.

So, even if spending less was the cause (which can be debated), spending more was not the solution, as government outlays dropped from $91.9b in 1937 to $86.1b in 1938, despite the recession being over in June 1938.

@routsounmanman

Actually, the short term/long term perspective is the exact opposite. Short term, Greece would be a horrible place to be. No one would loan to you in the short term, forcing the country to solve its problems now. Like a bankruptcy, its an abrupt way to end the burden of creditors. It would cause a massive shortage of money for the country, causing a very brutal recession.

However, it would, in the long term, solve your problems. Since the country would have to solve the problems in and of itself, without external help, it would ensure that when it had fixed the problems, it didn't have to do so under the auspices of any other country, and have to satisfy anyone else. Once you were revenue-neutral, you'd have to pay back no one.

Once that was done, and Greece proved that it was solvent, external sources would loan to Greece again, but hopefully it would be taken in moderation, and Greece would have a chance at joining the big boys at the table, if not being stronger than many, since it had worked out an agreeable public/private sector without the aid of other nations propping up corruption.

I've read this elsewhere on the meltdown - Greece is like a drug addict. There are a few ways of dealing with a drug addiction. Defaulting would be like quitting cold turkey, and removing all drugs from the person's reach.

New Zealand - 22.9

We are awesome.

I've also read that elsewhere (defaulting would be the best thing for us to do right now). It would be like a wake-up slap, huh? Fine by me, our government, community and laws are corrupt to the core. If such a revolution is necessary, then so be it.

Would you agree with what I said? would leaving the EU and the Euro offer any advantages to us, or it would make things worse?

My biggest fear for Greece is that they'll get bailed out but the IMF and the EU, raise some taxes to help manage with the deficit and then go back to simply spending on the public sector non-stop and learn nothing.

I'm utterly disgusted to hear that the clergy is paid by the public sector. I can understand why the church isn't taxed but separating them for the government payroll would be a logical step to saving a lot of money. Beyond that I have no idea what needs to be cut, but if the secot truly is 8 times bigger then the UK sector Greece has been unsustainable for a LONG time.

In my humble opinion, half the public sector should be slashed off. Clergy should be seperated too. Taxed while we're at it, they have billions upon billions of cash and jewelry. Unemployment would lead people towards the private sector, and the country would get much more competitive overall.

Defaulting is not that bad. Yes it is stupid to let debt grow so large that you have to default, but defaulting is in fact the only real way of solving the problem.

Investors lost credibility in Greece (as they will lose in other countries in the coming years), and they sure as heck can't get confident again by seeing Greece grow its debt even more (i.e. a "bailout", which is in fact just delaying the problem).

What many politicians in other EU countries aren't saying is that the Greek bailout is largely also a bailout of their own banks, which would take a big hit if Greece defaulted.

Saw the riots on the news today. I hope all my relatives over there are doing ok.

routsounmanman said: SamuelRSmith said: I would post something more than this, but what I have to say would probably come off as very cold... so, I'm not going to. (Unless you really want me to ). Go ahead. I'm not wearing earplugs and as I've already stated, i'm no expert in economics. Could someone with some knowledge on the subject enlighten me, why is it so bad to default? Could there have been another way, other than resorting to the IMF for help? Why are things so bad now, we've been running deficits for decades now.

http://krugman.blogs.nytimes.com/2010/05/05/greek-end-game/

Perhaps it recovered quicker than the Great Depression... because it wasn't as big as one? A year long recesion is still a LONG one... you make it sound like it's short.