The BBC has the article and video Greek debt crisis: Banks to stay shut, capital controls imposed.
“[Rejection] of the Greek government’s request for a short extension of the programme was an unprecedented act by European standards, questioning the right of a sovereign people to decide,” Mr Tsipras on Sunday said in a televised address.
“This decision led the ECB today to limit the liquidity available to Greek banks and forced the Greek central bank to suggest a bank holiday and restrictions on bank withdrawals.”
The Greek prime minister said that wages and pensions, as well as bank deposits, were guaranteed.
I had hoped that Greece had a plan to roll out its own currency at the same time as taking the steps it took today. Or maybe I should have read the article Greek debts cannot be repaid in euros!
If debts cannot be repaid they will not be repaid. Debts, in the commercial world, usually end up being settled.
Therefore, it has to pay in real goods and services: Tourism. Olives. Feta cheese. Ouzo. Shipping. Whatever Greece makes, does and sells, Germany needs to buy to enable the debt to be settled. And it needs to buy more from Greece than it sells to Greece. That way Greece ends up with the euros, which pays the Greeks for growing the olives, running the tourist hotels, making the cheese etc . This enables Greece to provide jobs for the unemployed, improve its Government’s tax revenue base, grow its economy, and also enables the Greeks to service, and eventually settle, their German debts.
The same naturally goes for Spain, Italy and even France. In other words, German debts get repaid when, and only when, Germany decides to accept real goods and services instead of euros. This in turn means that Germany has to run an economy more along the lines of the UK and the USA economies and import more goods and services than it exports.
If Germany and Holland don’t want to accept the reality of the situation, it is they who should exit the Euro not Greece or Spain.
June 29, 2015
I wake up to find that the Japanese stock market index, Nikkei 225, has fallen 599 points or 2.88% to a level of 20,110. Financial Times has the article Greece referendum plan jolts world markets.
This is delicious irony, as the EU tries to punish Greece, but the investors outside of Greece are being hit really hard. The hardest hit investors might be the very people who are trying to punish Greece. This is the clearest example of the too big to fail syndrome. If someone owes you a little bit of money, you can hold them hostage to their debt. On the other hand, if someone owes you a lot of money, they can hold you hostage to their debt.
The BBC article EU chief feels ‘betrayed’ by Greece is even more hysterically funny. You don’t even have to read the article. Reading the headline is funny enough.