What can greece central bank do?

[pitham1]

How could they? The IMF and maybe everyone else by now admits the debt is unsustainable. That is the same as saying that whatever the greeks do they won't ever be able to pay back the full amount of the debt. What the greek government should have done these last few months was prepare to leave the euro and reintroduce the drachma by themselves.

A write-off debt, or an extended repayment schedule with very low interest rates have the same effect.
So they could give Greece this benefit, without calling it a write-off of debt.

[dinofelis]

There are a lot of misunderstandings here.   One can think of banking what one wants, but the Greek problem is NOT a banking crisis.  It is a state that went broke, that's all.

The Greek state has been spending much more than it got tax revenues for the last 15 years, and moreover, with the help of Goldman Sachs experts, has been hiding its deficit in complicated bookkeeping constructions.

These corpses became visible in 2009, when, for the first time since the end of dictatorship in Greece in the seventies, there has been a power change in the Greek government.
The new government, probably still in "electoral combat mode", made public the financial lying of the Greek state in 2009, when it turned out that they had a double digit deficit that was presented as something like 3%, and that the state debt was much higher than indicated.

This short moment of honesty had a totally different effect than anticipated, I suppose: financial markets lost confidence in the Greek state.  It is a bit of an irony that those coming to power and replacing the crooks had as effect that they now made the Greek state losing confidence.

With its huge debt and deficit, Greece was in a very bad shape when financial markets lost confidence (when their interest rates skyrocked).

This is when the "troika" took over.   They decided to lend Greece STATE money and IMF money to be able to honor its financial obligations with respect to their former financial partners.
This was done for 2 reasons of course:
one was to help out Greece who was in a bad shape not being able to borrow on the private market
but the other was of course that most former financial partners of Greece were French and German banks, who were themselves just recovering from the banking crisis of 2008, and to avoid that all that had been done to save them, would be wasted if they had to take the losses on their former Greek loans.

The idea was simply to give Greece some time to get back confidence on the financial markets (as was the case with Ireland and Portugal for instance).   That the "panicking" would be over, and that Greece would be able to borrow again, like everybody else, on the financial markets, paying back the troika for the emergency credits during a panicking time.  The requirements, of course, were that the Greek state would have a plan to be financially sound again.  Deficits should be eliminated, and a surplus should be generated to show that the Greek state had the resources to pay back loans.  This is what was called "austerity measures".

That's where things went wrong.   The Greek economy was a bubble living on credit.  There was no genuine economic power.  It was all fake, on state expenses.  Taking away the credit on which they had been living, and the whole thing collapsed.

The deficits got reduced, but in the mean time, Greece's REAL economy showed up, which was 25% lower than the bubble on credit.  The Greek governments never really managed to get a genuine correct balance.  In a depression environment, it is not easy to reform.
This made the ground for populist movements like Syriza, promising good life again based on, well, no idea.  That's what populism is for.

So we simply saw a state suffering the real consequences of neo-Keynesianism: blowing a bubble fake economy based upon deficit spending.  Many western states do that, but the Greek state simply did it more and faster.

This has nothing to do with fractional banking, "money out of thin air", or abusive credit.  This simply is the long term consequence of deficit spending, but at Greek rates, we got the movie in accelerated mode.

One cannot, at the same time, fulminate against "money out of thin air"  and "fractional banking" on one hand, and "austerity" on the other hand.

What does austerity actually mean ?  It means that a state spends no more than it earns as income.  In any sound money doctrine (such as bitcoin is based up), there's no way to escape "austerity" in the long run.  If you give in on austerity this year, you will have to be "twice as severe" next year.  Non-austerity is deficit spending.  With sound money, that cannot go on for ever.

An economy that has grown (supposedly) on non-austerity, that is, on deficit spending, is nothing else but a fake bubble.  There is no real production backing it.  One is living a good life on borrowed money, that's all.
As a state, you can do this by taking on a lot of civil servants and distributing a lot of allowances of all kinds.  That's essentially what the Greek state did.

In fact, given the deficit spending nature of the Greek state, the Euro is too much of a sound money to be good for them.  This is why they should leave the Euro zone.

[brekyrself]

They had a plan B?

http://www.ekathimerini.com/199945/article/ekathimerini/news/varoufakis-claims-had-approval-to-plan-parallel-banking-system

[johnyj]

Something worse is coming. The banks allows only 60€ per day or 420€ at once per week to withdraw from ATM.
For most of them it is not enough.

This is another strange thing: It seems Greek government have no control over what their own bank is doing, they can not stop their own bank from carrying out capital control, thus banks using capital control to threaten Greek parliament to give in to more austerity measure

So it seems these governments and parliaments in western countries are just a show, they don't have any real meaningful power, they can not decide on their own fate, it is banks who have the real control over the country

[johnyj]

my point was that early adopters become richer without doing anything, very similar to the governments, and they can maintain their position endless until they decide to leave the "game"

Investment decision making is the most difficult work in the world, thus the reward is become richer, but definitely not just sitting there doing nothing. At any moment, you can become an early adopter of any new things, but your chance of hitting a home run is very low. And to maintain your position is not an easy task

It is a common phenomenon in financial world, scarce and valuable resource will all lead to this result: Many people are sitting on their early investments that grows and grows in value over generations: Land, gold, forest, large enterprise, even Google and Apple stocks ...

However, you can almost never foresee the future. Many people just ignored bitcoin when they saw it crashed from $30 to $3 during 2011 bubble, and there will also be many people ignore it when it crashed from $1200 to $200 during 2013 bubble

[qiwoman2]

It's not a banking problem alone and the GCB an not issue a bandaid for the Greek Crisis. The mentality in Greek Politics and also in the Lap People has to change so that we all learn the biggest lesson of all, to live within our means and not be bombarded by the rampant consumerism and American PIPEDREAM mentality because it just isn't sustainable. It may have been o.k for a few Million US peeps and a few European Elites but it has impoverished nations and we got the complete crap what we have today of destabilised countries, 1 rampant refugee crisis and billions of broke people who were promised the world if they overstretched and borrowed to buy a ton of imported goods and cars they simply couldn't afford. Also adopting the Euro and buying Ninja Derivatives from WALL ST before the blow up was a disaster waiting to happen. The GCB cannot fix that, only a wake up call and real solutionists can solve the problems in Greece and Worldwide for that matter. We need a solid team of problem solvers, not just politicians to help change the Status Quo in Greece.

[Wekkel]

There are a lot of misunderstandings here.

Good summary. Wondering how long it will take the public to understand that there are more basket cases in the EU, although less extreme and with more political clout.

[lissandra]

So to basically summarize greeks situations.

A few people made money pocketed personally Im pretty sure from the state, then have a few experts to cook the books for last 15 years.

Then ask for money and make it seem like its a banking euro situation for greece.

[johnyj]

It's not a banking problem alone and the GCB an not issue a bandaid for the Greek Crisis. The mentality in Greek Politics and also in the Lap People has to change so that we all learn the biggest lesson of all, to live within our means and not be bombarded by the rampant consumerism and American PIPEDREAM mentality because it just isn't sustainable. It may have been o.k for a few Million US peeps and a few European Elites but it has impoverished nations and we got the complete crap what we have today of destabilised countries, 1 rampant refugee crisis and billions of broke people who were promised the world if they overstretched and borrowed to buy a ton of imported goods and cars they simply couldn't afford. Also adopting the Euro and buying Ninja Derivatives from WALL ST before the blow up was a disaster waiting to happen. The GCB cannot fix that, only a wake up call and real solutionists can solve the problems in Greece and Worldwide for that matter. We need a solid team of problem solvers, not just politicians to help change the Status Quo in Greece.

If GCB could print euro then their problem will disappear, just like FED printed 5x USD and most of the problem in US after financial crisis are solved (at least for 10 years)

Money printing works because most of the people do not understand how money works. When FED print 5x more money and buy lots of things, companies around the country will just see lots of incoming orders from large state organizations and they can immediately produce more, hire more, and make more money. Their sight is just limited on the available money to earn, they are seldom interested in the things happening beyond that scope

From an individual point of view, fiat money has relative stable value, this is their belief, so this belief gives central banks power to stimulate the economy, more money means more purchasing power, and a large amount of purchasing power will create boom. Since the production will always increase when more money arrives, there is almost no inflation as long as the money are not created at a speed of one fold a month

[GreenStox]

It's not a banking problem alone and the GCB an not issue a bandaid for the Greek Crisis. The mentality in Greek Politics and also in the Lap People has to change so that we all learn the biggest lesson of all, to live within our means and not be bombarded by the rampant consumerism and American PIPEDREAM mentality because it just isn't sustainable. It may have been o.k for a few Million US peeps and a few European Elites but it has impoverished nations and we got the complete crap what we have today of destabilised countries, 1 rampant refugee crisis and billions of broke people who were promised the world if they overstretched and borrowed to buy a ton of imported goods and cars they simply couldn't afford. Also adopting the Euro and buying Ninja Derivatives from WALL ST before the blow up was a disaster waiting to happen. The GCB cannot fix that, only a wake up call and real solutionists can solve the problems in Greece and Worldwide for that matter. We need a solid team of problem solvers, not just politicians to help change the Status Quo in Greece.

If GCB could print euro then their problem will disappear, just like FED printed 5x USD and most of the problem in US after financial crisis are solved (at least for 10 years)

Money printing works because most of the people do not understand how money works. When FED print 5x more money and buy lots of things, companies around the country will just see lots of incoming orders from large state organizations and they can immediately produce more, hire more, and make more money. Their sight is just limited on the available money to earn, they are seldom interested in the things happening beyond that scope

From an individual point of view, fiat money has relative stable value, this is their belief, so this belief gives central banks power to stimulate the economy, more money means more purchasing power, and a large amount of purchasing power will create boom. Since the production will always increase when more money arrives, there is almost no inflation as long as the money are not created at a speed of one fold a month

Yep socialism caused damage can be offset by money printing, because the food stamp and welfare caused by it, can easily be taken away by rationing and money printing.

What they got for 10 years will be taken away in the next 10 years, with interest!

[MinerHQ]

So to basically summarize greeks situations.

A few people made money pocketed personally Im pretty sure from the state, then have a few experts to cook the books for last 15 years.

Then ask for money and make it seem like its a banking euro situation for greece.

They have lot of social welfare program for people so their tax money is not sufficient for all those spending. So they need to rethink about their social spending

[botany]

So to basically summarize greeks situations.

A few people made money pocketed personally Im pretty sure from the state, then have a few experts to cook the books for last 15 years.

Then ask for money and make it seem like its a banking euro situation for greece.

They have lot of social welfare program for people so their tax money is not sufficient for all those spending. So they need to rethink about their social spending

You want to rethink social spending in a country with 25+% unemployment again. You need to rethink that line of thought. It can lead to a disaster.

[GreenStox]

So to basically summarize greeks situations.

A few people made money pocketed personally Im pretty sure from the state, then have a few experts to cook the books for last 15 years.

Then ask for money and make it seem like its a banking euro situation for greece.

They have lot of social welfare program for people so their tax money is not sufficient for all those spending. So they need to rethink about their social spending

You want to rethink social spending in a country with 25+% unemployment again. You need to rethink that line of thought. It can lead to a disaster.

Most countries in europe have 25% unemployment, it all because money printing and subsidizing crappy businesses, while keeping legit ones out with regulation.

Such an oligarchy.

[Gronthaing]

So to basically summarize greeks situations.

A few people made money pocketed personally Im pretty sure from the state, then have a few experts to cook the books for last 15 years.

Then ask for money and make it seem like its a banking euro situation for greece.

They have lot of social welfare program for people so their tax money is not sufficient for all those spending. So they need to rethink about their social spending

You want to rethink social spending in a country with 25+% unemployment again. You need to rethink that line of thought. It can lead to a disaster.

Most countries in europe have 25% unemployment, it all because money printing and subsidizing crappy businesses, while keeping legit ones out with regulation.

Such an oligarchy.

What metrics are you using for those 25%? Average unemployment in the Euro area is 11%. From Germany's 4% to Greece with more than 25%. Don't know exactly how they calculate that. But even considering people who gave up looking for work, 25% unemployment in most countries doesn't make sense.

[johnyj]

Yep socialism caused damage can be offset by money printing, because the food stamp and welfare caused by it, can easily be taken away by rationing and money printing.

What they got for 10 years will be taken away in the next 10 years, with interest!

If people don't understand how money works in today's monetary system, more money printing will always be a solution for any problem

At least majority of the people I talked to, especially those with an economy degree, they have no idea how money creation works. They are full of misconceptions that they learned from those books

In Greece's case, if their central bank lose the ability to create euro, then it is no longer a central bank, but a commercial bank

People constantly say that commercial banks can create money when they issue a loan, then why in this case, Greece central bank can not create money by issuing trillions of loans to Greek government? Because commercial bank can not create money, they must first have money, then issue a loan, those books are all misleading. But you can imagine, even those people have economy degrees are all having a misunderstanding of what is really going on, how could they see the truth? Money printing will still work for decades

[RealBitcoin]

Not to brag here but did anybody noticed Helleniccoin's massive increase?

http://coinmarketcap.com/currencies/helleniccoin/

About 10000% increase this week, looks like some greek guys are really getting into crypto (perhaps their central bank buying it? JK. )

[HarHarHar9965]

So to basically summarize greeks situations.

A few people made money pocketed personally Im pretty sure from the state, then have a few experts to cook the books for last 15 years.

Then ask for money and make it seem like its a banking euro situation for greece.

They have lot of social welfare program for people so their tax money is not sufficient for all those spending. So they need to rethink about their social spending

You want to rethink social spending in a country with 25+% unemployment again. You need to rethink that line of thought. It can lead to a disaster.

Most countries in europe have 25% unemployment, it all because money printing and subsidizing crappy businesses, while keeping legit ones out with regulation.

Such an oligarchy.

What metrics are you using for those 25%? Average unemployment in the Euro area is 11%. From Germany's 4% to Greece with more than 25%. Don't know exactly how they calculate that. But even considering people who gave up looking for work, 25% unemployment in most countries doesn't make sense.

no, I actually think he is right, I read in a newspaper a couple weeks about unemployment regarding Europe and people are really in a jiffy over there, with 1/4th people with no jobs, I think the working and maturity of the government speaks a lot about it, printing out of debt is a shortcut to inflation.

[Pab]

You dont understend how Eurozone isworking,EBC and national central banks
Lets take Germany like example
Bundesbank president were warning Merkel and EBC,that what thayaredoing is driving Europe,including Germany to catastrophe,all thatausterity,raising debts EBC QE,all that can create huge problems

And what nothing,Bundesbank ,germany central ban voice is nothing,nobodycare,In Eurozone national central banks importance is limited to almost zero.EBC is only onecentral bank for all Eurozone countries

That is even hard to believe  ,becouse eurozone countries are independent countries

Euro has been created like a political project,practically money are in Germany hands

[RealBitcoin]

You dont understend how Eurozone isworking,EBC and national central banks
Lets take Germany like example
Bundesbank president were warning Merkel and EBC,that what thayaredoing is driving Europe,including Germany to catastrophe,all thatausterity,raising debts EBC QE,all that can create huge problems

And what nothing,Bundesbank ,germany central ban voice is nothing,nobodycare,In Eurozone national central banks importance is limited to almost zero.EBC is only onecentral bank for all Eurozone countries

That is even hard to believe  ,becouse eurozone countries are independent countries

Euro has been created like a political project,practically money are in Germany hands

Its hard to believe,since the board members of the Bundesbank are also board members of ECB, so its funny how they dont have influence there.

Also Every central bank from EU (including non eurozone members) send a representative to ECB aswell.

[SimpleIn]

The GCB all they can do is to stall the collapse.

But mostly i think banks need to increase reserve rates, the bank insureres need to increase their fees, the investment insurance also need to increase its fee.

I think the banking system as we know it is done for. Good, i wont miss it, time to decentralize finance.

Come to papa Bitcoin 

I agree. Well said!