Like any ancient Greek legend, it might end happily or it might end in an epic tragedy. One way or another, Greece will be a very interesting country this year. For the first time since Portugal in 1974 when the military removed the Salazarist dictatorship in a bloodless coup, we might very well see a government in a western country being removed by extra-parliamentary means.

The Greeks are facing huge economic problems. Their budget deficit is as bad as ours but so far the government seems powerless to really do much about it. The EU has grave doubts about whether the government's accounting procedures can stand up to scrutiny. After all, only a few months ago they were saying their budget deficit was around 3% of revenue. Then they had to hold their hands up and admit it was actually around 12%.

Moreover, they have a huge national debt which far exceeds the country's GDP requiring huge borrowings just to pay off the interest. The interest bill is accumulating because international banks are getting more and more wary and are charging them higher rates for borrowing.

The Greek government needs to some serious cutting back on expenditure as well as sacking thousands of public servants. But it's faced with a militant public who don't take no s**t from no-one. The Greek police is still associated in many minds with the right wing dictatorship that ruled the country a few decades ago. Remember the riots that convulsed Athens in December 2008?

So, they have to take some seriously harsh decisions which are practically guaranteed to get tens of thousands onto the streets. The pressure is also building from Brussels. Greece is a small country but the scale of the problems is dragging the euro down. The EC said tonight that it has the power under the Lisbon Treaty to force more cuts on the Greeks if they deem them to not be sufficient.

The Germans and Italians discovered to their cost in WW2 that the Greeks don't like foreigners sticking their noses in. But this time, something's gotta give.

Greece is going to go tits up! Remember them kicking off in Athens. Wait till they get a load of the EU busting their balls over cuts.

Somehow I'm not feeling like going there this year, I think there will be military rule there soon.

The thought of huge numbers of mostly young men in uniforms on the streets does have a certain appeal.

No no- thats keeping your eye on Greeks.

I am thinking about the implications of a coup in a EU country, one of the rules of membership is the country must be a democracy. So would Greece be expelled from the EU and if so what would happen to the Euro.

That's interesting. Did they not have these powers pre-Lisbon? Increased European control of member state's finances wasn't discussed much in the public debates.

well I think its a long shot before that happens yet but greek society is relatively corrupt by european standards(maybe not italian though). If there was a coup they would have to leave the EU. what would happen re the euro is anyone's guessbut if they started printing notes zimbabwe style then I guess economic and military action would follow as that would damage everyone else in the eurozone. but all that is very very speculative.

True but wouldn't the ECB have to have those powers to protect the Euro.

I am thinking that the democratic Government of Greece, in a way, has already been removed by extra-parliamentary means. The non democratic elected officials in Brussels is now governing and imposing Greek financial policy.

They did have the power to impose fines if the 3% limit was breached. Now, there are more powers with regard to monitoring.

See this:
http://www.rte.ie/news/2010/0203/greece.html
"The European Commission has sought to use new powers under the Lisbon Treaty to impose a 'quasi-permanent' monitoring system on the Greek public finances."

I remember discussing this point online somewhere with someone. Must have been politics.ie. I don't see any reference to it in the various Lisbon threads here.

Well, they will be if quick action isn't taken. In fairness, being in the eurozone club has many privileges but there are rules too. The Greeks could leave and re-establish the drachma as their national currency thereby allowing them to keep running huge deficits without Brussels wagging its finger.

But things are so bad that they're not far off getting to the point where no commercial entity will lend them money. Then they'll need to go to the IMF. Every country has the independence to live within its means. No country has the power to keep on borrowing and borrowing.

well if they get bailed out by the IMF the IMF will impose the cuts, so if EU give money they will probs use the same criteria as the IMF otherwise the ECB will look weak. So Greece will be forced to fire lots of civil servants. Im starting to think we should start do more premptive stuff here, to stop EU or IMF bailing us out, maybe privatise a few things, like the ESB, the Airports, anything worth a few bob, bring in expenses for receipts, increase places on 3rd level in future growth areas in the world economy etc etc.

But one great thing about Greece means the euro might go down in value which will help Irish business, but on the other side it means mortgages might start rising again to combat the decreasing value of the euro.

Invest in Greece, buy some property now. It will be bailed out

Em no, if things hit the fan then you might not be allowed into greece to whatever land you own.

This is depressing, I knew things were bad but it looks like its reached the turning point.
Greece effectively has no government. During the Riots 298 of the 300 ministers were not allowed to sit in office because they were all indited in a land scam.
Thing is, if the police take over the first thing that is going to happen is all the Romanian and Albanians will be run out or killed.

Yeah, very true.

Greece's difficulty could be Ireland's opportunity. If Greece does go pop, there will be huge downward pressure on the euro. Of course, the ECB may be forced to raise interest rates which would be double plus ungood for us but their hands are tied to some extent. But the PIGIS** countries comprise quite a sizeable percentage of euroland and the ECB won't want to completely destroy their prospects for economic recovery. So, they might be forced to let the euro slide a bit which would improve our competitiveness and remove some of the disparities with sterling.

Of course, this depends on what the Brits are doing with their deficit. If David Cameron is to be believed, a Tory government won't do much to cut spending or raise taxes in its first year. So sterling might be under pressure too meaning we mightn't gain that much.

**PIGIS = Portugal, Italy, Greece, Ireland, Spain. These are the 5 eurozone countries perceived to be facing major budgetary problems.