This page has been archived and commenting is disabled.
The Ultimate Moral Hazard: 70% of Greek Mortgages Are In Default
Just as we warned earlier in the year, total uncertainty about the future of Greece has enabled a growing sense of moral hazard as "if the nation doesn't pay its debt, why should we" sweeps across the troubled nation. As Greeks' tax remittances to the government, which were almost non-existent to begin with, have ground to a halt, so The FT reports, so-called 'strategic defaults' have become a way of life among Greece's formerly affluent middle-class..."I still owe money on the car and motorboat I can’t afford to use. Even a holiday loan I’d forgotten about...I’m living with my mother looking for work and waiting for the bank to come up with another restructuring offer."
As we detailed earlier this year, it appears taxpayers everywhere are learning from the best: their insolvent governments. In this case, Greek (non) taxpayers have decided to slow down their mandatory remittances to the government even more because the government may just not exist in two short weeks:
Most taxpayers have chosen to delay their payments, given that the positions of the two main parties leading the election polls are diametrically opposite: Poll leader SYRIZA promises to cancel the ENFIA and even write off bad loans, while ruling New Democracy acknowledges the difficulties but is avoiding raising issues that would generate problems and fiscal consequences.
The dwindling state revenues will not only hamper the next government’s fiscal moves, but, given that the fiscal gap will expand, also negotiations with the country’s creditors. The Finance Ministry will have to make plans for new measures and make sure that salaries, pensions and operating expenses are covered, especially in case the creditors do not pay the bailout installments which are already overdue.
Speaking to Kathimerini, a top ministry official confirmed the major slowdown in the rate of applications for debt settlement, and referred to post-election consequences from the shortfall in state revenues. The tax collection mechanism appears to be largely out of action while expired debts are swelling due to taxpayers’ wait-and-see tactics and the reduction in inspections. The same official pointed out that it is normal for revenues to lag during election periods, adding that this time there is no scope for shortfalls.
And now, as The FT reports, the situation has got far worse...
Strategic defaults have become a way of life among Greece’s formerly affluent middle-class. Many borrowed heavily as local banks competed to offer consumer loans at accessible interest rates after Greece joined the euro in 2001.
When the crisis struck they resisted changes to their lifestyle, convinced that it was only a blip on a continuous upward path to income levels matching those of Italy and Spain.
But they have since been forced to make harsh adjustments. With their own savings depleted and the country’s immediate future so uncertain — will Greece default on its debts and leave the euro? — many have simply stopped making payments altogether, virtually freezing economic activity.
Tax revenues for May, for example, fell €1bn short of the budget target, with so many Greek citizens balking at filing returns.
The government, itself, has contributed to the chain of non-payment by freezing payments due to suppliers. That has had a knock-on effect, stifling the small businesses that dominate the economy and building up a mountain of arrears that will take months, if not years, to settle.
“Business-to-business payments have almost been paused,” one Athens businessman says. “They are just rolling over postdated cheques.”
For Greek banks, mortgage loans left unserviced by strategic defaulters have become a particular headache, especially since the Syriza-led government says it is committed to protecting low-income homeowners from foreclosures on their properties
“There’s a real issue of moral hazard . . . Around 70 per cent of restructured mortgage loans aren’t being serviced because people think foreclosures will only be applied to big villa owners,” one banker said.
After six years of living in straitened circumstances, middle-class Greeks have also grown accustomed to shedding valuables inherited from their grandparents.
“There’s a big underground market in family heirlooms . . . many people feel a sense of shame at having to part with them so it’s not much talked about,” said Angelos, an appraiser for a Geneva-based antiques dealer.
“For buyers there are opportunities that only come along when there’s a real economic upheaval . . . in Greece it hasn’t happened since the second world war,” he adds.
As one middle-class father concluded, he is no longer embarrassed by his inability to pay, he says, because so many other parents are in the same situation.
”In the good years we took all these things for granted,” she says. “But the way Greece is headed with these people in charge [the Syriza government] I wonder whether I’ll ever have them again.”
»
- 25910 reads
- Printer-friendly version
- Send to friend
- advertisements -
Debt is illegal - Greece Court.
"ALL" Debt?
Isn't this when the Euro-jews swoop in and buy it all for pennies on the Euro? Agorot's on the Euro or whatever.
bingo, this is what I interpreted many years ago when I read about a swiss elite talking about greece. clear out the place, redevelope the place getting rid of all the mess, make it elite location for the coming age.
I must admit I'm pleased that the concept of moral hazard has been completely shifted away from our institutions on to the majority of Greek tax donkeys. Kudos to my friends in the ECB, treasuries and the European financial press for a job well done.
The global economic market where foreign debt payments are more important than feeding your people.
a lot of greek people feel like their government is a bunch of thieves, and that its stealing their money from them and wasting it. Im certainly sympathetic to that view, but many of these same people still want a massive quasi socialist welfare state that pays for pretty much everything, and you can't have it both ways. If you want some giant bloated nanny government, you gotta expect to pay half or more in taxes. If you aren't willing to pony up your money, you can't expect all the "free" shit at the same time.
ALL debt must be repudiated for the reset. You start with what you have.
You, sir, are correct. All banking debt and contractual obligations will be repudiated. Except yours, of course. The financial institutions will settle all contracts at nil, yet individuals will still owe their lenders. I would suggest you return to work rather than squander productivity blathering on a meaningless web blog.
Don't you need to do some more trading...in Belgium?
I'd expect that you do with the looming insolvencies.
LOL.
Just wait until they start using the Drachma inside of Greece with all the mortgages denominated in Euro's. Then the default rate will go to 100%....and the total Euro denominated debt default goes from 350billion Euro's (government debt) to 500billion (mortage defaults) overnight.
by the way...this is why Greece can't abandon the Euro. it's not just the .gov debt...IT'S EVERY FREAKING THING ELSE. Every mortgage, every credit card, every single cross border accounts payable that exist between a Greek business and a non-greek business. Every piece of the entire debt ponzi scheme blows up.
And the EU will not let that happen until they're willing to throw in the towel on this whole Euro experiment....which they KNOW they will have to do eventually anyway.
Everyone is just buying time...the financial VIPs are locking in their second, third and fourth homes and financial stockpiles knowing that when she blows...they're going to have to kiss the world as they know it goodbye....and they don't plan on spending a single second staying around to rebuild it all. That will be your problem....not theirs, while they're kicking back in one of the world VIP enclaves.
Debt, created by keystrokes. It should be paid back in keystrokes.
"70% of mortgages in Greece are in default" sounds like america!! hahahaha.
My college kids said their friends dont plan on paying back their student loans either...
It is nice choice, making more income $67 a hour from computer at home. My sisters friend has been earning 20k for a months and she works about 15 hour a working week. I make 10k last month, it is in real easy and meaningful , here you can checking... www.earnmore9.com
Moral Hazard! Ha Ha!
http://thedailyshow.cc.com/videos/qatlaz/mortgage-bankers-association-st...
Mortgage Bankers Association Strategic DefaultMorals have nothing to do with the current political or financial system. Anyone trying to convince you otherwise is trying to get you to play by a set of rules that don't apply to them.
That is some funny shit. "Hi Pot, my name is Kettle. You sure look black"
Incredible isn't it? Here's Henry Paulson, Goldman Sachs CEO/treasury secretary, whipping out moral hazard.
http://www.treasury.gov/press-center/press-releases/Pages/hp856.aspx
What a fucking piece of shit.
Debt does not matter. So?
No chance of a Greek recovery until at least 50% of Greek debt is written off. Greece should learn from Iceland.
On the other hand, such a writeoff may burst the global bond bubble.
Generally people pay their mortgages and rent. When they don't pay it is invariably because they can't pay, rarely do they actually have the money and choose not to pay if we are talking about ordinary homes.
You're only 1/2 serious....so, you think if we said Greece only owed 150billion Euro's, they would start paying that debt down!
i say....no way. Go for 90% write off and call me in the morning....then we may have a deal.
There is a real issue of moral hazard said one banker? Would this be the stupid fucking banker snorting coke on public transportation featured on the Hedge yesterday? Fuck you and your moral hazard you bailed out to big to fail cock sucker!
You throw a blanket over a couple of poles in the sand on the beach and you need a mortgage.
Smells like a raging depression is in play , ya think ?
Well...If the Nation of Greece defaults then all of the Private Property Owners will also be allowed to default on all Mortgage Note Holders (basically foreign Europeans).
In fact if the Greek Government elects to default then they also need to write that into law that any Foreign Mortgage Owner has no legal enforcements rights, or remedy in the Greek Legal System either.
There needs to be a total Debt forgiveness and a total reset.
The Greeks need to break all ties with the Western Banking System and pivot toward the Russians and the rest of the BRICS.
Fuck the European Union.
The European Union is a failed system with a flawed model and it needs to crumble.
One World Government is destined to failure and that is what the EU was set up as...a testbed.
It needs to be as painful as possible so that this is not ever repeated again.
Fuck the European Union as it is rife with Fraud and built upon the corruption of Socialism, a cancer.
Now you can junk that all that you want as it demonstrates that you celebrate Fraud and Corruption as well as a World Dictatorship.
As for me I will celebrate the demise as it signals a chance for Freedom and Liberty from despotic governments to take root and grow.
Fuck you Stateists. Your time is growing short.
I celebrate your collapse.
It is coming in September...Shemitah
Can hardly wait...
Everyone has defaulted in Greece. If only people knew how many shopkeepers are way behind on rent payments, how the two previous parties New Democracy and PASOK are not able to pay back bank loans, how doctors etc have not been paid amounts owing by government, how employers have not paid employees for months and how many people have moved in with their parents.
Nevertheless it is fascinating to see how the nation is considered to have escaped default when internally they are experiencing a massive default between citizens, government, banks and businesses.
If they "printed" it, you don't owe it. Period.
Liberty is a demand. Tyranny is submission..
Loans from the grifting banksters' fraudulent-reserve banks is wealth that was in reality stolen from you. You are borrowing your own wealth, and paying usury and higher prices at the store for the privilege. Then one day, you will be "rewarded" with equity in their fraud in the form of a "bail-in" in lieu of ever seeing your original deposits again.
Checks in the mail translated as Fuck You!
Who gives a shit?
That one "middle-class father" at the bottom of the article is a real whacky dude.
Right in the middle of the paragraph, he goes all Bruce Jenner.
Maybe he was talking about selling something other than what is usually understood to be the family jewels.
I am too tired for all this...snoozing...
ended up buying 3 oz of gold US Buffalos...I feel pretty refreshed after days of Greece default/no default saga.
JUBILEE....
here it comes
When everything was booming it was Wall Street's investment banks that proved to be the weakest link in the global economy.
Greece is bad, but not that bad.
I'll give Greece credit for one thing. At least they're honest about voluntary taxation. There you actually have to send (whatever amount you deem appropriate I guess) to the government. Here the cocksuckers suck it directly out of your pay and still have the balls to call it voluntary and then they totally fuck your life up and steal everything AND they still throw your ass in prison if you don't VOLUNTEER. I knew there was something I liked about the Greeks.
A Jew, an Italian, and a Greek are riding in a car. The car slides off the road, crashing into a tree, killing all three of them. The next thing they know, they are all standing in front of God in heaven. God says to the Italian, "All you ever cared about was stuffing your face with pizza and pasta. But I'm willing to give you another chance; the next time you walk into a pizzeria, I'm sending you straight to hell!"
Then he turns to the Greek and says, "All you ever cared about was your orgies and your wild sex parties. But I'm willing to give you another chance; The next time you perform anal sex, you?re going straight to hell!"
Then he says to the Jew, "All you were ever concerned with was saving money and digging around everywhere for loose change. But I'm willing to give you another chance; the next time you pick up a penny off the ground, I'm sending you straight to hell!"
So the next thing they know they are all standing on the sidewalk. They start walking down the street and they pass a pizzeria. The Italian looks in the window and says, "Oh that pizza smells so good, I just got to have one slice!" He runs through the door and POOF! He disappears. The Greek and Jew walk down the street and the Jew notices a penny on the sidewalk. He thinks to himself, "Oh, look at that penny! I just got to have it!" He bends over to pick it up and POOF! the Greek disappears
In thir system, there is no longer a currency to pay down debts. In our system, there is no longer a valuable currency to pay down debts.
It is time that we all learn that sometimes we can fail - so must some countries, corporations, banks, - get on with it already. Time to face reality or face the eventual consequences.
The word is dissemble.
We are living and witnessing the disassembly of society.
This is a mass of failure that is just starting to pick up the momentum of reality.
"SOON AS I GET PAID" Keb Mo. Again. :-)
https://www.youtube.com/watch?v=FzaGLBHS0b4