Timmy elsewhereSeptember 16, 2013 Tim WorstallTimmy Elsewhere8 CommentsAt the ASI. An example of why Greece has such problems. previousIt’s that policy based evidence thing againnextHow deep is that gene pool 8 thoughts on “Timmy elsewhere” Steve September 16, 2013 at 9:43 am They say a little hard work won’t kill you, but the Greeks aren’t taking any chances. JamesV September 16, 2013 at 11:21 am Gosh, I thought it was all the euro’s fault. Steve September 16, 2013 at 11:30 am JamesV – when they had the drachma, markets were better able to factor in the consequences of the Greeks behaving like Greeks and price accordingly. The Euro has been a disaster for them. JamesV September 16, 2013 at 12:48 pm Right, because it says in the whole euro thing that you must lend to everyone on the same terms. There was no reason for the market to not factor in Greeks being Greeks, via charging higher interest rates. As they had done for decades beforehand. All the Euro did was change the nature of counterparty risk – from money-printing devaluation to default. And as I’ve asked millions of times, why do investors care to be repaid 1:1 in freshly-printed drachmas worth half of what they should be over 0.5:1 in euros? And indeed, those investors have had both – Greek money printing under the Drachma, and the biggest sovereign default in history in the Euro. And they will presumably never learn. Steve September 16, 2013 at 3:01 pm JamesV – I’m not a financial bod but lenders evidently assumed that, under the single currency, Greek debt was now as good as German debt. What with there being the one central bank and all that. Well, they ken noo. Pat September 16, 2013 at 7:49 pm The Euro! johnny bonk September 16, 2013 at 10:05 pm @Steve – “lenders evidently assumed that, under the single currency, Greek debt was now as good as German debt” … how very well put, perhaps the most succinct explanation I’ve found. Perhaps you are more of a financial bod than you realise, and they do indeed ken now. Steve September 17, 2013 at 9:27 am Thanks Johnny Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.