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Beware of Greeks Bearing Bonds
| Tue Dec. 8, 2009 2:50 PM PST
The collapse of Dubai World was just a shot across the economic bow. But the collapse of Greece? That would be a little more spectacular.
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Comments
Deceptive that title
Submitted by The Lounsbury (not verified) on Tue Dec. 8, 2009 4:38 PM PST.
Here I thought it was going to be your attempt at commentary on statistical analysis in portfolios. The Greeks...
Well, in any case, McArdle is being rather Euro alarmist. Typical really. Greece has been - since admission, the weakest, basket-casiest member of the EU. Deserves to get bounced - should have never been admitted. Romania is as well governed as Greece. Only bloody reason they got in was the sad classicist fetish among Euro elites....
quidquid id est, timeo danaos
Submitted by Anonymous (not verified) on Tue Dec. 8, 2009 5:24 PM PST.
quidquid id est, timeo danaos et dona ferenetes
i've always wanted to say that
Nope
Submitted by Kiril (not verified) on Tue Dec. 8, 2009 8:28 PM PST.
It's a McArdle link, so I won't even click it. Suffice to say, if she wrote it, it's probably not true. So no need to worry, Kevin.
Meanwhile...
Submitted by hollywood (not verified) on Tue Dec. 8, 2009 8:32 PM PST.
so much for the friggin' public option. Seems like it got aborted in the first trimester. Is there any doubt whose Congress this is?
post-dated checks?
Submitted by Bill Arnold (not verified) on Tue Dec. 8, 2009 8:37 PM PST.
I wonder how much of the problem is related to the the still-widespread use of post-dated checks in Greek business (so I'm told at least by a Greek co-worker). They are effectively promissory notes, passed from business to business to business. (Collectively, they would be bad in a recession.)
This article provides some detail: http://www.ekathimerini.com/4dcgi/_w_articles_economy_0_06/04/2009_106069
No, although that is a symptom of the Greek econ problems
Submitted by The Lounsbury (not verified) on Wed Dec. 9, 2009 2:11 PM PST.
The Greek problems are Sovereign Debt (Gov't issued), although the Greek private sector has major indebtedness issues and the primitiveness of their internal economy (c. 1960 to be frank) adds to their problems.
Left socialist paradise, Greece is.
If the best argument that can
Submitted by MaynardHandley on Wed Dec. 9, 2009 12:01 AM PST.
If the best argument that can be offered up is "What good is a common currency, many would ask, if some of the member states pay their debts while others do not?" I can't much see what this has to do with the Euro.
No-one expects dollar denominated debts by states or municipalities to be paid by the federal government. No-one expects dollar denominated debts by Mexico etc to be paid by the federal government. Frankly the argument is idiotic.
McArdles analytical fault
Submitted by The Lounsbury (not verified) on Wed Dec. 9, 2009 2:24 PM PST.
She is rather too hostile to EU as a general matter, and extrapolates from an excessively negative position to start with.
First, Greece is small - physically and as well economically relative rest of EU. A number of "Associated" countries or non Euro Zone EU members would actually impact the Euro zone more heavily on a default than Greece.
Among the mitigating factors for Greece that would allow it (ceteris paribus) to be ring fenced are:
(i) Everyone knows that Greece has a fucked up government alternating between muddle headed Leftists and possibly stupid quasi fascist Right (and no proper liberal economic policy at all)
(ii) Greek fiscal and domestic structure are fairly different from the rest of EU Euro zone (although Italy is closer)
(iii) Greece has ... well more or less been fraudulent in its official statistics, which is a fairly unique situation (versus Spain and Ireland, for example, where they clearly have debt issues, but invested better and have not only clearly more competent - relatively - political systems, but also better fundamentals.)
There is a very market plausible story for ECB and EU to sell to markets that Greeks are basically fuck-ups and the rest of EU and Euro zone is rather better.
The reality is Greece is more of a 3rd world country than Turkey.
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