<p>@dismalscience said it all. I'd add that the EU is trying to get Greece's property in two indirect ways.</p>

<p>First, the troika demanded Greece to privatize some of its public assets. While privatization benefits the bull market, asset prices in Greece are, of course, at their prehistoric levels. Greek companies are all cash constrained now, and the likely buyer of this discounted property will be other European companies, mostly the net creditor countries.</p>

<p>Second, the <a href="https://twitter.com/EdConwaySky/status/620272062771429377/photo/1" rel="nofollow noreferrer">leaked drafts</a> of the troika's new demands asked Greece to put its "valuable assets" in a Luxembourg-based fund. The only point of this transaction, as I see it, is to seize the assets if Greece defaults later.</p>

<p>Correct me if my suspicion about the latter are wrong.</p>

CC BY-SA 4.0
2015-07-13T22:07:36.410Z
2020-05-08T09:54:41.177Z
2020-05-08T09:54:41.177Z
Anton Tarasenko
<p>In short, Greece has already been taken.</p>

<p>The key point to note is that money does <em>not</em> have any value until it gets exchanged for either goods or services. Until that exchange happens money does not have any value whatsoever; it is merely a <em>promise</em> and creating promises costs literally nothing. Every country (except for those in currency unions, yes, Greece) can create endless money supplies at no cost because money as we use it today does not have any value.</p>

<p><strong>Goods and services have value</strong>, not money. For anybody that happened to live through hyperinflation times or even quantitative easing periods which is happening as I am writing these words as ECB launched 1 trillion (!) QE program, it's obvious how burning money can be. </p>

<p>ECB is not after money as it can easily create endless money supplies, just to mention, quantitative easing.</p>

<p><strong>What ECB is after is control.</strong>
ECB wants to control country's domestic matters and make sure that ECB, or wider, the whole banking sector, maintains its supreme position in the country's economy.</p>

<p>Both Lucas Papademos and Mario Monti (yes, Italy) have strong ties to the biggest banks, yet they were supposed to represent their country's interest. Whose interest do you think they were defending? And these two guys <a href="http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html" rel="nofollow">aren't even an exception</a>.    </p>

<p>So for ECB, the main player in the Euro currency union, it makes sense to keep buying Greek bonds because it costs them nothing and, most importantly, assures Greece stays in Euro Zone which in turn means that ECB essentially controls the country.
The only challenge is how long other countries who are <em>not</em> directly the lenders, will tolerate such a scenario because they are the real losers.</p>

<h2>Update</h2>

<p>As predicted in my answer, ECB just confirmed that it will step in and provide liquidity for Greek lenders. ECB did so because it is in its own interest to keep Greece in Euro zone regardless of how much money they require to maintain liquidity as creating money does not cost anything. Greece will only leave Euro zone if 1) decides to do so 2) other Euro zones countries will kick Greece out.  </p>

<p><a href="https://en.wikipedia.org/wiki/Lucas_Papademos" rel="nofollow">https://en.wikipedia.org/wiki/Lucas_Papademos</a></p>

<p><a href="http://uk.reuters.com/article/2015/03/31/uk-markets-bonds-qe-idUKKBN0MR0FG20150331" rel="nofollow">http://uk.reuters.com/article/2015/03/31/uk-markets-bonds-qe-idUKKBN0MR0FG20150331</a></p>

<p><a href="http://www.wsj.com/articles/eurozone-leaders-reach-unanimous-agreement-on-greece-says-eus-tusk-1436771076" rel="nofollow">http://www.wsj.com/articles/eurozone-leaders-reach-unanimous-agreement-on-greece-says-eus-tusk-1436771076</a></p>

CC BY-SA 4.0
2020-02-26T17:45:06.987Z
So why did Greece give control to ECB? Every transaction has a buyer and a seller.
Criticize SE actions means ban
CC BY-SA 4.0
2020-02-26T22:38:15.080Z
If there was a referendum in 2001 and people voted for then that would mean that general public does not have an understanding what fiat currency is.
And there wasn't any referendum then it would mean that politicians do not have understanding how fiat works. Or maybe they did but they sold themselves? Who knows. Greece is definitely not better off with ECB.
matcheek
CC BY-SA 3.0
2015-07-08T22:06:06.897Z
negative voters - leave your comment
matcheek
CC BY-SA 3.0
2015-07-11T12:28:03.057Z
While there is some truth to there being no *intrinsic* value of money, that needn't say that in the current equilibrium, it has none. Also, I really dont like the conspiracy theory / speculation that kicks in at the second half of the answer.
FooBar
CC BY-SA 3.0
2015-07-11T13:05:54.497Z
@FooBar I find it embarrassing seeing people incapable of embracing a simple truth: **banks are profit-driven**. Assuming that banks will use their supreme position in today's economy  to **decrease their profits** is kind of naivety that I doubt even my 3 years old son can beat. **Banks act rationally**, so they 1) delegalized any competing public tenders. Left just one and seized the control over it 2) insured bank's deposits with taxpayers money 3) raised min capital for banking to millions 4) deprived State of controlling majority of money supplies and finally 5) control the banking law
matcheek
CC BY-SA 3.0
2015-07-11T13:16:33.710Z
How is anything you wrote above relevant for a central bank? Judging from your past history here, I value my time too much to jump into a lengthy discussion here. You wanted a comment on the vote, here it is. I wont followup on this post no more.
FooBar
CC BY-SA 3.0
2015-07-11T13:26:04.307Z
@FooBar You misunderstood the question. OP did not ask about "central" . He asked about banking. Plus you offend other users without having an understanding of fundamentals of banking yourself where the only thing you have to realize is that bank act rationally.
matcheek
CC BY-SA 3.0
2015-07-08T00:41:48.167Z
2015-07-13T21:44:21.127Z
2015-07-13T21:44:21.127Z
matcheek
<p>In general, there are three kinds of debt:</p>

<ol>
<li>Secured debt, like a mortgage or a repurchase agreement. With a mortgage, for example, the debt is secured by a lien on the home, and if the debtor does not pay, the creditor can seize the home.</li>
<li>Unsecured debt, like a credit card or corporate bond. Governments will generally allow creditors to liquidate many of the assets of an insolvent individual or firm to meet unsecured obligations, subject to (often significant) limits. For individuals, things like retirement accounts and primary residences are often off-limits for debt collection.</li>
<li>Sovereign debt. Sovereigns typically issue debt under their own law, and countries generally don't set up their legal systems in such a way as to allow other countries to take their things. However, when sovereigns issue debt under foreign countries' law, as <a href="http://www.forbes.com/sites/timworstall/2012/05/16/the-value-of-foreign-law-in-investing-greece-pays-out-on-english-bonds/">Greece has done with some UK-law bonds</a>, payouts tend to be higher, and overseas property is in fact <a href="http://www.businessinsider.com/ghana-court-says-argentine-ship-left-illegally-2014-10">occasionally seized</a>. However, seizing the domestic property of a defaulted sovereign is effectively impossible, as one of the benefits of being a sovereign is that you control your own territory— attempting to seize another nation's "structures, cities, industries, lands, etc." (setting aside the fact that most structures, cities, industries, and land in Greece are not owned by the government) is what is known as an act of war.</li>
</ol>

CC BY-SA 3.0
2016-08-13T04:20:25.560Z
that sentence "is what is known as an act of war" is well written, explicative.
Fix.B.
CC BY-SA 3.0
2015-07-08T07:49:09.243Z
This is a great answer!
Stan Shunpike
CC BY-SA 3.0
2015-07-16T19:33:09.730Z
'act of war' -- don't understand. Are creditors the aggressors of the 'war' as if they are a state of their own?
BCLC
CC BY-SA 3.0
2015-07-16T19:48:01.127Z
If creditor states were to attempt to seize Greece's domestic assets by force (to be clear: there has never been any suggestion that anyone would do so), that would constitute an act of war. This is the real-world fact of most sovereign debt— the most you can do (with the exceptions noted in the main answer) is ask nicely for repayment, and encourage others to not lend to countries that default. If a country decides to default on its domestic-law debt, there's no further recourse available to creditors, because the exact entity that would enforce the contract is the one that is defaulting.
dismalscience
CC BY-SA 3.0
2015-07-07T17:24:13.720Z
2015-07-07T17:24:13.720Z
dismalscience
<p>Normally, when you don't pay a debt, your creditors take your goods (house, car, etc).</p>

<p>If Greece cannot pay its debt, can its creditors take Greek goods (structures, cities, industries, lands, etc)? Can Germany, or other organizations, become owners of Greece?</p>

<p>Maybe that's a silly question, but for a non-expert it sounds logical.</p>

CC BY-SA 3.0
2015-07-09T22:06:59.680Z
lol.  This is a good question presented in an entertaining way.
chicks
<government-debt><debt><bonds><financial-crises><default>
If I don't pay a debt, then the creditor takes my goods. Why, then, do Greek creditors not take Greece?
Alberto Fontana
# If I don't pay a debt, then the creditor takes my goods. Why, then, do Greek creditors not take Greece?

(Asked by: username_0 on 2015-07-07)

Normally, when you don't pay a debt, your creditors take your goods (house, car, etc).

If Greece cannot pay its debt, can its creditors take Greek goods (structures, cities, industries, lands, etc)? Can Germany, or other organizations, become owners of Greece?

Maybe that's a silly question, but for a non-expert it sounds logical.

**Tags:** government-debt, debt, bonds, financial-crises, default

> **Comments:**
> **username_1**: lol.  This is a good question presented in an entertaining way.  

---

## 3 answers

### Answer by username_6 on 2015-07-07. Score: 20 | Accepted answer

In general, there are three kinds of debt:

1. Secured debt, like a mortgage or a repurchase agreement. With a mortgage, for example, the debt is secured by a lien on the home, and if the debtor does not pay, the creditor can seize the home.
2. Unsecured debt, like a credit card or corporate bond. Governments will generally allow creditors to liquidate many of the assets of an insolvent individual or firm to meet unsecured obligations, subject to (often significant) limits. For individuals, things like retirement accounts and primary residences are often off-limits for debt collection.
3. Sovereign debt. Sovereigns typically issue debt under their own law, and countries generally don't set up their legal systems in such a way as to allow other countries to take their things. However, when sovereigns issue debt under foreign countries' law, as [Greece has done with some UK-law bonds](http://www.forbes.com/sites/timworstall/2012/05/16/the-value-of-foreign-law-in-investing-greece-pays-out-on-english-bonds/), payouts tend to be higher, and overseas property is in fact [occasionally seized](http://www.businessinsider.com/ghana-court-says-argentine-ship-left-illegally-2014-10). However, seizing the domestic property of a defaulted sovereign is effectively impossible, as one of the benefits of being a sovereign is that you control your own territory— attempting to seize another nation's "structures, cities, industries, lands, etc." (setting aside the fact that most structures, cities, industries, and land in Greece are not owned by the government) is what is known as an act of war.

> **Comments:**
> **username_8**: This is a great answer!  
> **username_9**: 'act of war' -- don't understand. Are creditors the aggressors of the 'war' as if they are a state of their own?  
> **username_6**: If creditor states were to attempt to seize Greece's domestic assets by force (to be clear: there has never been any suggestion that anyone would do so), that would constitute an act of war. This is the real-world fact of most sovereign debt— the most you can do (with the exceptions noted in the main answer) is ask nicely for repayment, and encourage others to not lend to countries that default. If a country decides to default on its domestic-law debt, there's no further recourse available to creditors, because the exact entity that would enforce the contract is the one that is defaulting.  
> **username_7**: that sentence "is what is known as an act of war" is well written, explicative.  

---

### Answer by username_2 on 2015-07-13. Score: 3

@username_6 said it all. I'd add that the EU is trying to get Greece's property in two indirect ways.

First, the troika demanded Greece to privatize some of its public assets. While privatization benefits the bull market, asset prices in Greece are, of course, at their prehistoric levels. Greek companies are all cash constrained now, and the likely buyer of this discounted property will be other European companies, mostly the net creditor countries.

Second, the [leaked drafts](https://twitter.com/EdConwaySky/status/620272062771429377/photo/1) of the troika's new demands asked Greece to put its "valuable assets" in a Luxembourg-based fund. The only point of this transaction, as I see it, is to seize the assets if Greece defaults later.

Correct me if my suspicion about the latter are wrong.


---

### Answer by username_3 on 2015-07-08. Score: -2

In short, Greece has already been taken.

The key point to note is that money does *not* have any value until it gets exchanged for either goods or services. Until that exchange happens money does not have any value whatsoever; it is merely a *promise* and creating promises costs literally nothing. Every country (except for those in currency unions, yes, Greece) can create endless money supplies at no cost because money as we use it today does not have any value.

**Goods and services have value**, not money. For anybody that happened to live through hyperinflation times or even quantitative easing periods which is happening as I am writing these words as ECB launched 1 trillion (!) QE program, it's obvious how burning money can be.

ECB is not after money as it can easily create endless money supplies, just to mention, quantitative easing.

**What ECB is after is control.**
ECB wants to control country's domestic matters and make sure that ECB, or wider, the whole banking sector, maintains its supreme position in the country's economy.

Both Lucas Papademos and Mario Monti (yes, Italy) have strong ties to the biggest banks, yet they were supposed to represent their country's interest. Whose interest do you think they were defending? And these two guys [aren't even an exception](http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html).

So for ECB, the main player in the Euro currency union, it makes sense to keep buying Greek bonds because it costs them nothing and, most importantly, assures Greece stays in Euro Zone which in turn means that ECB essentially controls the country.
The only challenge is how long other countries who are *not* directly the lenders, will tolerate such a scenario because they are the real losers.

## Update

As predicted in my answer, ECB just confirmed that it will step in and provide liquidity for Greek lenders. ECB did so because it is in its own interest to keep Greece in Euro zone regardless of how much money they require to maintain liquidity as creating money does not cost anything. Greece will only leave Euro zone if 1) decides to do so 2) other Euro zones countries will kick Greece out.

<https://en.wikipedia.org/wiki/Lucas_Papademos>

<http://uk.reuters.com/article/2015/03/31/uk-markets-bonds-qe-idUKKBN0MR0FG20150331>

<http://www.wsj.com/articles/eurozone-leaders-reach-unanimous-agreement-on-greece-says-eus-tusk-1436771076>

> **Comments:**
> **username_3**: negative voters - leave your comment  
> **username_5**: While there is some truth to there being no *intrinsic* value of money, that needn't say that in the current equilibrium, it has none. Also, I really dont like the conspiracy theory / speculation that kicks in at the second half of the answer.  
> **username_3**: @username_5 I find it embarrassing seeing people incapable of embracing a simple truth: **banks are profit-driven**. Assuming that banks will use their supreme position in today's economy  to **decrease their profits** is kind of naivety that I doubt even my 3 years old son can beat. **Banks act rationally**, so they 1) delegalized any competing public tenders. Left just one and seized the control over it 2) insured bank's deposits with taxpayers money 3) raised min capital for banking to millions 4) deprived State of controlling majority of money supplies and finally 5) control the banking law  
> **username_5**: How is anything you wrote above relevant for a central bank? Judging from your past history here, I value my time too much to jump into a lengthy discussion here. You wanted a comment on the vote, here it is. I wont followup on this post no more.  
> **username_3**: @username_5 You misunderstood the question. OP did not ask about "central" . He asked about banking. Plus you offend other users without having an understanding of fundamentals of banking yourself where the only thing you have to realize is that bank act rationally.  
> **username_4**: So why did Greece give control to ECB? Every transaction has a buyer and a seller.  
> **username_3**: If there was a referendum in 2001 and people voted for then that would mean that general public does not have an understanding what fiat currency is. And there wasn't any referendum then it would mean that politicians do not have understanding how fiat works. Or maybe they did but they sold themselves? Who knows. Greece is definitely not better off with ECB.  

---

