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Cuchulainn
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### Creative Thinking on Greece

QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnBanks closed for a week.Is this a practice session for the Grexit?Are the Greeks in denial? Do they realize they could be kicked out of Euro? What's the status on foreign direct investment (FDI) and all that stuff?
Last edited by Cuchulainn on June 28th, 2015, 10:00 pm, edited 1 time in total.

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Creative Thinking on Greece

QuoteOriginally posted by: CuchulainnQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnBanks closed for a week.Is this a practice session for the Grexit?Are the Greeks in denial? Do they realize they could be kicked out of Euro?That's probably a blessing in disguise.

Cuchulainn
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### Creative Thinking on Greece

QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnBanks closed for a week.Is this a practice session for the Grexit?Are the Greeks in denial? Do they realize they could be kicked out of Euro?That's probably a blessing in disguise.The devil you know and the devil you don't know.

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### Creative Thinking on Greece

QuoteOriginally posted by: CuchulainnQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnBanks closed for a week.Is this a practice session for the Grexit?Are the Greeks in denial? Do they realize they could be kicked out of Euro?That's probably a blessing in disguise.The devil you know and the devil you don't know.Indeed! They did not know how devilish the euro would be!

trackstar
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### Creative Thinking on Greece

Some details on the schedule:July 30 - miss 1.5 billion euro payment to IMF? (not the end of the world yet)July 5 - referendum TBDJuly 10 - T-bill holders 2 billion eurosJuly 13 - IMF - 454 million eurosJuly 17 - T-bill holders 1 billion eurosJuly 20 - 3.5 billion euros due to ECB - bond buyback (if they miss this, that could be the end) I feel bad for the elderly people and others who are on public assistance, living on those checks month to month - this must be terrifying for them.Greek Debt Timeline - WSJ updated on June 29
Last edited by trackstar on June 28th, 2015, 10:00 pm, edited 1 time in total.

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### Creative Thinking on Greece

There is no easy solution to Greece's problem. The root cause of their problem is bad demographics. There are too many elderly people who want to draw Government pensions and Government free healthcare. This costs an enormous amount of money. They do not have the young, educated workforce who will pay the taxes to support the elderly people. Their economy has been contracting now for 8 years in a row. They want Europe to share the burden of the problem which they have created, but the whole of Europe (probably with the Exception of Germany, the Scandinavian countries, Denmark, and possibly UK and Ireland) is in fact heading into the same cesspool as Greece.Japan has been experiencing this issue for the past twenty years now. Twenty years ago, Japan's economy was the same size as the US economy. Today, it is one-fourth of the size of the US economy.ten years from today, the US debt will be closer to $40 Trillion as compared to the current$18 Trillion. We will see what happens then. Normally when Debt-to-GDP ratio exceeds 150 %, the economy begins to head into a downward spiral from which it is impossible to recover.

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### Creative Thinking on Greece

This thread reminds me of some failed attempts on Wilmott.com to discuss the optimal geographic scope of a currency. The divergence of the German and Greek economies shows that even these two relatively proximate economies they cannot be measured in a common numeraire. These economies, and others, fluctuate some what independently of each other. Worse, they each have respective drift terms that create unsustainable discrepancies in how wages, goods, and debts should be priced in the two locations.

Cuchulainn
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### Creative Thinking on Greece

QuoteOriginally posted by: Traden4AlphaThis thread reminds me of some failed attempts on Wilmott.com to discuss the optimal geographic scope of a currency. The divergence of the German and Greek economies shows that even these two relatively proximate economies they cannot be measured in a common numeraire. These economies, and others, fluctuate some what independently of each other. Worse, they each have respective drift terms that create unsustainable discrepancies in how wages, goods, and debts should be priced in the two locations.But now we have the upcoming iCurrency.

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### Creative Thinking on Greece

QuoteOriginally posted by: CuchulainnQuoteOriginally posted by: Traden4AlphaThis thread reminds me of some failed attempts on Wilmott.com to discuss the optimal geographic scope of a currency. The divergence of the German and Greek economies shows that even these two relatively proximate economies they cannot be measured in a common numeraire. These economies, and others, fluctuate some what independently of each other. Worse, they each have respective drift terms that create unsustainable discrepancies in how wages, goods, and debts should be priced in the two locations.But now we have the upcoming iCurrency.LOL! Exactly! A self-proclaimed beautiful person said "time will tell"! ;-)What was interesting is that the iCurrency discussion did highlight (for me at least) the instabilities that underpin any given numeraire used in a non-trivial economy. The exchange rates between the numeraire and labor, the numeraire and goods, or the numeraire and other numeraires (including the numeraire and it's future self) are subject to the forces of supply and demand (modulated by human cognitive tendencies such as sticky prices). That makes each exchange rate somewhat unstable. These instabilities of the many kinds of ratios of items-to-numeraires then operate under imperfectly correlated patterns supply and demand. If supply and demand are unstable for one commodity, they are even more unstable for the ratios across two commodities in a local economy (e.g., the ratio of labor_skill_i to staple_good_j). Those instabilities will be even worse across widely separated locations.One might think that the mobility of money, people, and goods can mitigate these instabilities in supply and demand. At first glance, it is true in that the unemployed in one region can move to another region that has jobs. At first glance, the EU and the Euro seem like a great idea for creating a broader base of supply and demand that can damp out more of these local variances. But there are two hidden assumptions about the effects of mobility. The first is the consequences of mobility in terms of who gets left behind. Unless the mobile population is exactly representative of the whole population, the people that are left behind form an even more-imbalanced, more-impoverished economy than was there before the exodus. The mobility of the excess supply of labor removes from the local economy what might not have been excess demand for goods. Mobility can be especially damaging for fixed assets which lose their base of support when people leave. We can easily see this phenomenon operating around the world in which rural areas are losing people to cities, leaving plummeting property values, shuttered shops, and rapidly fading rural ghost towns in their wake. The second hidden assumption (that compounds the first) is in the effects of competition by which the first hidden assumption self-amplifies. Geographic heterogeneity of the market-clearing value of the numeraire WRT geographic distribution of people who value that commodity more than the market rate versus the people who value that commodity less than the market rate will drive the mobility of people, goods, and money from poorer regions to richer ones. Someone in the US or Germany can easily afford to pay several dollars or euros for a liter of petrol or diesel. Someone in rural India or Africa cannot. Hence oil flows West. And when that liter of petrol or diesel was derived from grain or oilseed, then the person in India or Africa starves. That phenomenon motivates various forces (especially governments) to impose heterogenous prices and disrupt the mobility of people, goods, and money. Although it might seem like a universal numeraire can buy anything anywhere, these various forces imply that prices will vary strongly. And if the prices for a given good vary, it's really as if the numeraire itself had no constant price making it not actually universal.BTW, the mobility of money is even more perilous as one can see in recent delightful examples such as IceSave, subprime mortgages, and even the flash-crash. The easier it is to move money, the more likely money is to slosh into the wrong place which looks like the right place because the movement of money can create a temporarily self-fulfilling prophecy.
Last edited by Traden4Alpha on June 28th, 2015, 10:00 pm, edited 1 time in total.

Anthis
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### Creative Thinking on Greece

QuoteOriginally posted by: traderjoe1976There is no easy solution to Greece's problem. The root cause of their problem is bad demographics. There are too many elderly people who want to draw Government pensions and Government free healthcare. This costs an enormous amount of money. They do not have the young, educated workforce who will pay the taxes to support the elderly people. Their economy has been contracting now for 8 years in a row. They want Europe to share the burden of the problem which they have created, but the whole of Europe (probably with the Exception of Germany, the Scandinavian countries, Denmark, and possibly UK and Ireland) is in fact heading into the same cesspool as Greece.I doubt demographics are much worse than the rest of EU Countries, probably are a bit better in northern countries due to immigration trends, better and stabler jobs and more developed and generous social welfare system. Immigrants tend to be younger, while the last two factors tend to permit couples to be less sceptical about having one or two more children.On the other hand, long-term chronic missmanagement and corruption in pension and healthcare systems are the basic cause of the problems currently, plus the huge unemployment rates among youth.

tagoma
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### Creative Thinking on Greece

Creditors are to blame, Stiglitz says

Cuchulainn
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### Creative Thinking on Greece

QuoteOn the other hand, long-term chronic missmanagement and corruption in pension and healthcare systems are the basic cause of the problems currently, plus the huge unemployment rates among youth. Is that the solution? That's austerity in another form. It does not generate jobs.How to come up with a creative solution? All those university kids who can't get a job. I reckon the good ones emigrate.I studied in Italy in the 1970s and even then there were many many Greeks studying at the university where I was. Worrying.
Last edited by Cuchulainn on June 28th, 2015, 10:00 pm, edited 1 time in total.

Anthis
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### Creative Thinking on Greece

MiloRambaldi
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### Creative Thinking on Greece

Paul Krugman on the failure of austerity

Cuchulainn
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### Creative Thinking on Greece

This make for interesting reading.Greece Financial Statement 2004 QuoteWithin the European Union, entry into the Eurozone depends on the applicant nation meeting certain economic criteria
Last edited by Cuchulainn on June 29th, 2015, 10:00 pm, edited 1 time in total.