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  1. #1

    A flawed Greek tragedy joke - but why?

    I received this slightly amusing joke via email but it made me think:

    "It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt and everybody lives on credit.

    On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

  2. #2
    The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

    The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the taverna. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

    The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money and leaves town.

    No one produced anything. No one earned anything. However the whole village is now out of debt and looking to the future with optimism.

    And that, Ladies and Gentlemen, is how a bailout package should works! "

    The above ONLY works if all the parties absolve the others of paying any interest for their credit.

    Could it work in practice?

    I don't know, but the injection of a massive interest free loan to pay off all debts and then repaid in full and all at zero interest (or accepting the debt paid in full and 'forgiving' the creditors previously agreed inteest - who knows?

  3. #3
    My point is that if an individual or a country becomes insolvent (i.e. cannot servicetheir debts) it's far better to come to an arrangement to pay back the capital interest free rather than go bankrupt.

    No takers?

  4. #4
    If somebody owes you 10,000 and your contract states they have to repay you the 10,000 plus 1,000 interest wouldn't you rather have your 10,000 back and 'forgive' the 10% interest than receive absolutely nothing if that somebody becomes insolvent?

  5. #5
    I believe the same should apply with countries and when western economies have reached this crazy point where just servicing the interest on debt costs many many millions of pounds each and every day I'd rather see a global sovereign debt amnesty rather than see economies go down the tube however foolish their governments were to get themselves into the present situation.

  6. #6
    I probably would accept just the capital if it was repaid instantly. I could make up the lost interest (hopefully) by using the money elsewhere. Not sure this applies to the Greeks etc, as they're in no position to repay instantly.

    I might look at it differently if the capital (alone) was to be repaid over, say, 10 years. I'd probably reason -within the next 10 years you can get yourself sorted out and pay me the interest as well.

  7. #7
    If they can't afford to pay you back the interest and capital repayments as agreed then they are insolvent.

    If they go bankrupt you get nothing.

    If they pay back just the interest and not the capital you'll be waiting forever to get back your capital.

    If they pay back just the capital you'll maybe get all your money back over time but could reinvest the money as it trickled in.

    If by some miracle they were able to borrow the capital elsewhere at 0% on condition you accepted instant payment in full without any accrued interest as per your contract you'd accept willingly even if grudgingly.

    A hard call apart from the last option?

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