Obviously imports will get more expensive. That's hardly the end of the world.

You do realize Greece imports most of its fuel and capital goods right?

You know, the stuff that makes a modern economy grow.

Just what do you think is Greece going to grow with?

AFAIK their primary import for a decade or so has been other peoples money, so they could pay for things they couldn't afford. How anyone thought this was sustainable is amazing. Not that Chicago/Detroit/most of the US is actually different.

MM MD

I have no idea, I'm not really qualified to centrally plan Greece's economy. But defaulting and devaluation certainly provides a path forward while the status quo was just a perpetual nightmare for Greece.

Defaulting and devaluation shut the paths forward, not open.

Greece hadn't paid any of its debt (sorry, debtors paying themselves don't really count) for years. And the effective value of the debt, with lower rates, was cut in half over the past few years. The troika refrained from cutting "face" accounting value to preserve the appearance that Greek is living up to its obligations. Defaulting and simply negating the debt doesn't relieve Greece of debt burden; it only removes the incentive to reform.

Now Greece punts the reforms and has to go on with diminished (I don't think it will disappear) European support, massive flight of capital, much higher costs of borrowing, and brain drain.

This vote just locked Greece into an economic disaster that will only result in a fresh round of negotiations in a few years, possibly only 1, under significantly worse circumstances. That's even if Tsipras and Syriza eventually manages to get a favorable deal.

The only positive I get out of this is when Greece runs out of outsiders to blame, it will finally look inward and implement the needed reforms.

So basically nothing changes?

Yeap. Except all get worse.

The referendum gave them a chance to remove Syriza/Tsipras. They decided to commit economic suicide instead.

Truly committed performance artist does perfect impression of Alexis Tsipras stumping for the NO vote

Before we call this a disaster we have to see if the bluff of the Greeks gets called, there is a chance it wont and the Troika will fold.

Do you really think Greece leaving the Euro would be a bigger disaster than Greece staying in with the status quo? I mean the status quo is already a disaster.

If it can stay in and get a structure of debt repayment and investment that is actually sustainable or at least realistic then its not a disaster, or at least the lesser of two disasters or maybe not, who the **** knows, its such a **** up its hard not to just see **** up whatever they do.

Leaving the Euro is probably the best thing in the long term unless there is actual fiscal union, who knows again though, as this drama might push that closer to reality.

It's no easier for them to get euros now than it will be if they leave the eurozone. If Greece needs imports, they'll have to come up with some money to buy them, same way they do now.

The hole is growing deeper by the day. I cant see how you get a financing deal with added €50b of debt relief, or whatever it was the IMF said, through the parliaments in the Eurozone after this. Varoufakis would have to walk to Germany on his knees to make them pass anything at this point.

Short term I think it almost certainly will be. The Argentinian default was awful and they didnt even have to introduce a brand new currency. They just had to let it float.

The austerity is going to happen either way (it will probably have to be harsher out of the Eurozone) and the reforms are actually good things that should happen but now might not. So it's a question of whether better monetary policy will make up for all that in the medium/long term.

Well if they could lengthen or restructure the repayments and just make the total repayment scheme something that the Greek economy can actually realistically achieve.

Its kind of tragic because lots of Greek NO voters voted NO because they assumed this would lead to a better deal, not to Grexit.

I think it's the Greeks trying to call the bluff here and hoping that the EU won't want them to create a precedence for a nation leaving the EURO. Not sure whether that strategy is going to work.

That was the situation in place when Syriza was elected in December. The Eurozone loans are already being payed back until 2055, or something like that, at low interest rates. I cant see how they get a deal with loans that have to be paid back 2115, or whatever it would take, now.

Before all this there was a chance that there would be further debt relief at some point in the future, but it just seems completely unrealistic now imo.

The immediate problem is not Grexit, its funding of the Greek banking system:



http://www.bbc.co.uk/news/business-33404011

Since all the Greek banks are owned by the state this goes back to state debt / funding problems. Also it's wrong what was frequently said, also here, that the bailout money was used primarily to pay off foreign banks. The German IFO institute has investigated this and found that only around 1/3 of the money was used for that, the rest was used /wasted fully by the Greek governments on national programmes.

Most disappointing thing about this is the lack of LOLworthy treaty of Versailles comparisons in the press

"Germans should really understand the difficulty of repaying a large debt to foreigners" etc

Dont see how this is even possible.

ain't nobody caused greek debt problems but themselves.

oh my god looooooooooooooooooooooooooool greece

That IS the Grexit problem.

Eurozone was never going to just kick Greece out. Greece and Greek banks were going to find itself with no choice but to leave when it cannot get enough Euros to meet their obligations.

The Greeks got themselves in the ****, but the Troika attempt to rescue them from the **** has been terrible all things considered.

Poster above says the bailout money has been spent by the Gov into the Greek economy, even if they were spending the money on hookers and blow, this would have stopped GDP decreasing by 25%, so it seems A priori that the bailout money must have gone to creditors.

This means that the Bailouts primary function was to stop contagion in bond yields, however you have still put your self on the hook to Greece, and this part of the process has been handled very badly as far as I can tell.

http://www.cesifo-group.de/DocDL/For...015-June_1.pdf
page 12-17