FT: Grexit or Bankruptcy for Greece Within the Next 4 Years



grexit-drachmasThe Financial Times made a shocking prediction concerning Greece. While analyzing the sustainability plan of the German government that derived from the coalition between Angela Merkel with the Social Democrats. The newspaper wrote that within the next four years, Greece will either return to the drachma or declare bankruptcy, or maybe both scenarios will take place.

The Financial Times article was entitled “Germany’s coalition will have to break promises.” It characteristically mentions that the leaders of the ruling coalition would not follow through with their promises to the German voters because there is “a lack of preparation by the political class for what will hit it in the next four years. The big threat to Germany over the next four years is not demography but the unfolding eurozone debt crisis. No matter which crisis resolution scenario prevails, some promises made to the electorate are going to be broken.”

The FT article gave a prime example of what is to follow in the next four years of the Greek debt crisis and pointed out that: The Organisation for Economic Co-operation and Development is forecasting that the Greek sovereign debt ratio will stabilize at 160 per cent of gross domestic product in 2020. The EU and the International Monetary Fund have been basing their entire bailout arithmetic on a target of 124 per cent. In the next four years, Greece will either default or exit the euro – or both. The EU’s “pretend-and-extend” strategy of revolving loans at longer maturities and lower interest rates is approaching a natural limit.”


32 COMMENTS

  1. “US Investment Firm claims that Greece has A+ rating and is being hurt by lower artificial Rating – “Greece has advanced to 1st place from last place in most important fiscal indicators, which most believed was impossible” – http://www.amna.gr/english/articleview.php?id=4345

    The country’s debt is worthy of single A+ credit rating, he said. Credit rating agency Moody’s considers Greece’s debt far more risky and gives it a “junk” rating of C.
    “What many of the best and the brightest think they know about Greece, in an investment context they are almost certainly wrong,” he said on the call. He predicted that the bonds’ price would exceed 85 percent of par value next year, far higher than where they trade today.- http://www.reuters.com/article/2013/10/03/us-greece-bonds-japonica-idUSBRE9920UI20131003

    Let me guess dickhead, you know more than people who make billions in Financial trades before you get your Obese American/Albanian/Turk ass out of Bed? Please tell me now how this billionaire investor is wrong and your obese fat ass is right.

    Greece is not going to drachma . . in a few years not only will we have a strong economy we will have one of the strongest in the Western World as many wealthy countries such as Scandanavia and most northern european countries are going to explode from their own Housing Bubble – http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/02/these-18-countries-may-have-housing-bubbles-if-they-pop-god-help-us-all/

  2. Let’s all be honest with ourselves whether we live in Europe (European Union) or the USA or anywhere in the world that the concept of the euro was a disaster and a failure and never ever should have been carried out.
    The euro currency has destroyed many European countries (massive debt etc……..)
    How can people from different ethnic backgrounds, cultures, different languages, different work ethic be united under one currency? Each government of each European country was unique (For Greece = 100 %corruption ) by their own budget and expenditures. This single currency to compete against the US dollar failed miserably IMO.
    Greece should declare bankruptcy and exit sooner than later. Austerity has NOT WORKED. The Germans want their money but throwing “good money” after bad money will eventually stop. Money pit. Greece WILL NEVER EVER PAY BACK THAT MONEY. What upsets me more than anything is that the Greek government has absolutely no compassion or empathy for their next generation. The youths of that beautiful country will be slaves for the next 20 plus years if not more.

  3. Past and present members of PASOK and ND all of them involved in scandals, fraud, corruption that’s the majority of them (Tsohaztopoulos, G.Papandreou, Pangalos, Y. Papantoniou, Papoulias, Venizelos, Karamanlis, Simitis, etc………….)and so forth all should be arrested and taken to the Hague to face the International Court of Justice and the International Criminal Court based on treason , etc…………………..If found guilty, they ALL SHOULD BE EXECUTED! HUNG HIGH!
    No one is accountable for the rampant corruption for 4 decades.
    Not one politician goes to jail for corruption and fraud. Everyone of them is immune. Bunch of BS!
    Get that bottle of Champagne icing. It will be a beautiful day to celebrate once they get the [email protected]……..K out of the euro!

  4. Jim, I try to understand your points above. You are passionate and believe in Greece and want to see Greece bounce back. We all do. However, let us be realistic. How in the world will Greece in a few years say even 5 years come back?
    Unemployment is at a staggering 27% by the way that is a 6 month lag figure. The true estimate is MUCH HIGHER like in the 30’s.
    The youth unemployment is at 65% and climbing. Thousands upon thousand of businesses have close gone bankrupt in Athens alone never mind the rest of Greece.
    Greece cannot trade or has absolutely nothing to do with international markets.
    Who in their right mind, will invest in Greece considering trust issue and massive corruption which continues to this day?
    The Government is in disarray and will never change its mentality for protecting all the crooks and thieves who destroyed Greece
    IMO, Greece will either exit or declare bankruptcy.
    Theory doesn’t always work in practicality from your aforementioned.

  5. Not only drachma, but also Grexit.
    My Long Eur bets, count on Grexit.
    It saves the Greeks and the Europeans.

  6. A Greek man is so lazy, that he would fire himslef.

    A Greek get’s a haircut, who is the barber and who pays for it?
    The German!

    The Greek man is so frodulous, that he scams himself.

    When a Greek man debates with himeslf, his brain goes: “WTF, Whaat?”

  7. I have talked to 4 year olds with a better Wit and jokes

    What do you expect from Turkbanian FYROM’ians . . .

  8. Buddy Greece will not get kicked out; ever.
    Even if they attempt to leave they will be blocked.
    This is not purely for any financial reasons; if it were Greece would have been gone already.
    There is great geopolitical mileage for Europe & the USA in Greece staying.
    The Europeans & Americans do not want Russia or China getting a stronger foothold in Europe if Greece is forced to look elsewhere for beneficial trade agreements.
    Russia has already offered Greece to pay most of their debt for gas exploration rights.
    Greece could have taken that offer without austerity- but risked bad relations with Europe / America and even conflict with Turkey.
    Meanwhile trade agreements with China grow by the day…. Chinese giant Cosco already leases half of Pireas as they make Greece their number one dumpling ground for Chinese goods destined for all of Europe.
    Greece has mad some huge blunders but the Samaras Government is playing its cards well on this matter by playing one power against the other.
    It is a dangerous game though and they can get burned.
    But I see China & especially Russia as the better of the evils.

  9. This has nothing to do with Greece. FT was assessing the lack of credible German plan.

  10. The Germans are in no way to blame for our debt. Blame them for WW2 but it is dishonorable to blame them for our debt. We each have to take moral responsibility for our own mistakes.

    About the only thing that we can criticize (some) Germans for is when Germans (see Bild) resort to negative stereotypes or self-righteously go on and on about us about us not paying back our debts when Germany had a massive amount of it debts written off after ww2 (including debts to Greece that were never paid in full) .The Germans that aren’t purely populists understand its their turn to play benevolent nation (the role the US played on German post WW2.)

    I understand the difficult position they are in. On the one side they are willing to take a hit for their mistakes but at the same time they don’t want to be forever on the economic hook.

  11. Although the numbers you use look bad and in most countries would be exactly that in Greece they are not as bad as the world media makes them sound by and large youth unemployment is generally the norm ,above 50% not uncommon between studies army commitment etc most of the young do not enter the workforce until after the age of 25 plus majority only work during summer 27% unemployment does not factor a variety of options included family run business finally the Euro needs Greece in, the biggest beneficiary of Greece’s woes has be Germany, the problems with the smaller Euro states including Greece ( Ireland, Cyprus, Portugal ) has meant untold grief in those nations yet Germany has boom trade deficit massive all because of the cheap Euro at present Germany positive trade deficit of over 1.3Trillion
    Germany cannot afford to let Greece go ….not that I am a cynic but it almost seems that the power brokers in Europe needed the smaller countries, to fail we were expendable.

  12. Greece has no one to blame except itself..All politicians past and present are to blame..We have been a spending spree and alot got spent and now for the grand finale we have to pay for it.. Like it or not after years of doing nothing we are stuck with the bill a big fat chunky one at that..
    What is worse the government has to tax the people who are staying in Greece as most professionals on high salaries have packed up and left to western countries to find work and thus pay taxes abroad, our companies have closed and done the same..Who is going to pay the bill now all $500b of it..
    The government is failing to implement reforms and our only other avenue left is to sell the jewellery being our gas and oil reserves at bargain prices..
    If we are lucky at that..

  13. This will be probably sooner than four years and within the lifespan of this government. This has been a failed academic experiment in fiscal management of a nation by a regional organization, and failure of the coalition parties to force MPs to follow the leader or be thrown out policy. Clearly 160% debt to GDP is unsustainable and everyone knew that long before the FT report. We can now start pointing fingers of blame at one another while the ship goes down, or prepare the lifeboats while looking for a soft bottom to run the ship aground.

  14. What a bunch of populist baloney to skirt individual moral responsibility . All our politicians are not to blame nor are all average greeks innocent victims to the government.

    It is the mentality of always blaming and depending on the government that is the chief problem with Greece. If more Greeks focused on their own actions, rather than blaming other Greeks for their own bad life choices (much less shamelessly demanding handouts from otehrs), Greece not be in its current situation.

  15. Another good post.

    Greece has made massive cuts but with a shrinking economy, high unemployment, and still massive debt load increasing by the day… it is seems unlikely ill will be to pay without a haircut adequate enough to generate a small surplus.

    What it seems to boils down to is it going to be voluntary haircut under the framework of a Marshall Plan troika, or will it be a messy one like Argentina where Greece unilaterally decides what it can pay back. The former makes more sense for everyone but because egos and populism is also a factor, the latter may still happen.

  16. The debt is not going down because the banks are booking in paper debt and accruing interest on this debt. Greece can stop spending completely and it will still have a high GDP ratio because of this creative accounting swindle. What is needed is an audit and the Greek people only being forced to pay what they actually spent not this paper debt.

  17. Does anyone understand Accounting and know how easy it is to create debt. Its happening worldwide and ALL the citizens on the planet will be forced to pay. Wake up.
    Google Greg Palast “Vultures Picnic” and see how the Greek people got raped.

  18. Has it occurred to anyone that maybe the German People have been ripped off by the banks as well and the money they THINK went to Greece went elsewhere…whilst the Media has been hoodwinked into believing the German Taxpayer funds ended in Greece but really is sitting in an offshore private accounts?

  19. Always blame those who hold the cash and make the decisions(bankers and Politicians). Not the people of ANY(USA, Canada, Greece etc) country. The taxpayer just wears the losses……

  20. Oh, poor Slavic Skopian. Still upset that EU and NATO MEMBER Greece vetoed Skopia’s EU accession talks, and vetoed Skopia’s attempt to join NATO? Haha! Get used to it. As long as you Slavic Skopians continue to deny your obvious Slavic-Bulgarian roots, you will continue to receive veto after veto to all your attempts to enter the EU and NATO.
    Skopia is a tiny insignificant pseudo state with zero clout.