no Fasces just doesn't understand the situation as usual

Now, that's just mean. He's obviously just practising for his new show on Comedy Central, Colbert was deemed not over-the-top enough in his role as an ignorant American right-winger.

There is a referendumn in Greece, where the citizens are voting on how to solve the debt crisis.

I do understand...

I think his decission to call referendum is fascinating. On the one hand referendums should rarely be held on financial matters as there is a good chance that people would normally vote for no taxes and high public spending. It is therefore preferable in representative democracies to allow elected representatives to decide on such things. However, Greece is an exception IMHO. Their tax and spend policies are now being dictated to them by others and as such the people should affirm such measures or throw them out. Either way they will take responsibility for the result - bad or worse.

The other reason I find it interesting is that I think it sends a very clear message to lenders that their money is at risk when they lend to people companies or states that do not have a hope of paying it back. When they get around to realising this, and I know it will be painful, we can get on with living within our means. I'm saddened that some banks will fail but lending practices improve in the longer term and we will all be better for it.

Fasces, we all know that. Since your title and subtitle were completely stupid and misleading, you can't be surprised people mock you for that.

They should vote as they see fit, and accept the consequences of their vote.

To summarize, they can continue crippling austerity and stay in the Euro zone, or declare bankruptcy, get kicked out of the EU, and still face crippling austerity as no one will loan to them.

They don't have a good option, they have a fee bad ones to choose from.

Blaming them for overborrowing, extra, is irrelevant at this point - give them enough info to make an informed decision, let them make it, and move on.

But don't get too smug, because the US isn't exactly in a good place to lecture on debt

Hi everyone I'm gonna shout at the Greeks a bit in this post.
Before I go on, I am from the Netherlands, so you know "where I'm coming from" in the broadest sense of that expression.
Actually the decision is as unintelligent as all decisions Greece has taken so far that got them into this situation in the first place. The bizarrity of this situation is baffling! Why do we install parliaments and don't organize referenda on every issue? Because the issues being discussed are so complex, that ordinary citizens can't understand them, not because they are stupid, but because they simply don't have the time to get into issues ranging from foreign policy to what teachers should earn.
It's exactly for that complexity that we send intelligent and eloquent representatives who control the government and represent the people. At least, that's what I always do back in Holland. I /definitely/ don't want them to come back to me and say: "hey, you know what, it became really complicated, you decide." ??? NO you moron, I have my own problems.
The people choose the parliament to represent them and take decisions for them, not the other way around.

'declare bankruptcy, get kicked out of the EU, and still face crippling austerity as no one will loan to them.'

actually, without any debts to pay back, lending money to greece becomes a much safer bet!

Also, there is no mechanism with the EU to 'kick out' a member state; they could be asked to leave the Euro, and they may even prefer to leave the Euro and take the approach Iceland did when it's banking system collapsed.

@Holland '...Because the issues being discussed are so complex, that ordinary citizens can't understand them'

just so you know, I come from Ireland, another Euro-zone representative democracy.

Given the massive protests already, any government decision which didn't consult the people would either result in massive riots and possibly the removal of the government entirely, or smaller riots and continued difficulties doing anything.

By giving the people a say, and this not particularly complicated issue, they probably have the best chance to avoid civil strife, (though i'd say it will be far from being a civil war...) How can you call such a government moronic? i think it's the only smart move i've seen the Greek government make in months.

@redhouse - I know exactly where you are coming from and ordinarily would agree with you about the use of referendums. But these circumstances are exceptional, every Greek person is likely to suffer whichever the outcome will be, I think they have the right to decide on something that will affect them and their children for years to come. I also think that this could stop the protests - it is hard to protest after an issue has been decided in a referendum.

@Statagos - The Greeks need another x bilion this month to keep paying wages but also to continue paying interest on their loans. Declaring themselves bankrupt would mean not being able to borow more but also cuts their expenditure immensely. They will have to learn to live within their means; they will be forced to have a balanaced budget - that is no bad thing. They will also have the assets that the loans bought, better airports, highways etc. When they default things will actually get better for the Greeks a lot quicker I think. As for the rest of Europe - they are in for a shock. The 50% haircut that had been widely reported only applied to private banks, public bodies ECB; IMF recent bailout monies etc weren;t being reduced. Whe the other european taxpayers who funded these crazy loans realise that they are left picking up the tab expect more social unrest across Europe.

@ora - anyone loaning to Greece would require massive interest rates to account for risk. Its a sucker's bet, as those who just saw their debt holdings cut it half just found

'The 50% haircut that had been widely reported only applied to private banks, public bodies ECB; IMF recent bailout monies etc weren;t being reduced. Whe the other european taxpayers who funded these crazy loans realise that they are left picking up the tab expect more social unrest across Europe.'

doesn't that mean 100% of what greece owes public bodies is still going to be paid back? (unless they default) i don't think that is likely to lead to civil disorder across europe.

@Stratagos, what about after they default. Then their economy is almost certainly in better shape over night, no repayments to make leaves them with much lower expenses, and a much easier time paying back any new loans...

@orathaic and @maniac i agree with most of your analyses but disagree with the conclusion. I agree with the fact that the situation is exceptional but i disagree completely that this is something the system of representative democracy couldn't solve. What did Roosevelt do when Japan attacked Pearl Harbor, organize a referendum about it? What did Kennedy do when he wanted to send a man to the man? He /announced/ it. That's what a courageous leader does: you stand your ground in time of problems, that's what they're there for. Would be nice, to profit from the benefits of power and then when it gets tough claim it's the system's fault...

@ora.- from a purely financial level they will be a better risk, but if they can default once, they can do it again.

I'm not even saying they shouldn't bite the bullet at this point, but not only would they lose unfettered access to the Euro zone without tarrifs and such, there isn't a chance on hell investors wont demand higher interest rates to compensate for the risk. Maybe not as high as they pay today, but no where neat the 2% or so they were able to get in the past.

No matter what choice they make, there is only going to be a finite amount of money the government can raise through taxes given their existing system, so there *will* be cuts in their budget. How they choose to allocated the funds they do have will be a jell of a fight

Autocorrect fucked me once again, bah

@stratagos, of course they can default once and then again... but lending them money now when defaulting seems more likely is a terrible idea. (regardless of the interest rates, i think)

However, i don't think they will lose access to the EU market without tarrifs, (if that is what you mean) no-one wants to end the common market in europe, or even exclude anyone from it. (they currently include the three non-EU members EFTA members, and i'm sure Turkey has some deal where they get some access too... even the most extreme right wing British nationalists want to stay in the Free trade area, while leaving the rest of the EU institutions)

If you mean losing any money they will get from the ECB/IMF, then sure, you're right. They will likely be on the watch for the next series of banks to collapse and try to save them from damaging further economies...

(The threat of) Not lending to countries that defaulted in recent past is the only disciplining instrument investors have at their disposal. Government bonds are typically debentures, which means they are not backed by any collateral so if a government went bankrupt, bondholders will be treated as general creditors and might not receive anything at all. Investors would lend to bankrupted Greece only if it enforced reforms that would make another bankrupt much less likely. Coincidentally, those reforms would be mostly the same as those EU wants in exchange for further help. The proposed haircut should've been bigger (big Euro banks already started the painful process of acknowledging the contingent losses and raising capital so they would survive even worse results this year. Think about big bath technique, having one hugely negative year is better than having several less negative years in a row) but it's a better solution than uncontrolled bankruptcy both for Greece and Europe.

Turkey has Customs Union with EU for at least 20 years already. And trade liberalization is a process EU doesn't ever turned back, there's a recent FTA with South Korea, another one with Japan is in talks, the least developed countries have quite a good conditions as well (only on items they can't really export, though :) so kicking Greece out of EFTA is virtually impossible.

Look guys, we can have a slapfight over this but its ultimately up to the Greeks.

*If* they default, and To be frank due

Dammit.

If they default, and if as part of that default they are removed from the Euro, they wont be removed from the 27 member European Union, but they will be removed from the Eurozone. I misstated when I said they would be boned from a common market perspective.

Just a little on-topic, translation not necessary:

http://a1.sphotos.ak.fbcdn.net/hphotos-ak-ash4/316704_192334720843610_156671317743284_396230_1391649444_n.jpg