Eurozone Chaos: Final Episode?

RobitTV

If Greece defaults, We all default with it!

We go down with greece.

So is this the Final episode of The "Eurozone?"

ITV News: Bank's will run out of money, Cash machines will not give out money.

Is this how it all ends, Is this the end of The Euro and Europe.

Links:
News 1
News 2
News 3
News 4
News 5
News 6

Is this the end of The Euro?

oppenheimer1

RobitTV wrote: »

If Greece defaults, We all default with it!

We go down with greece.

So is this the Final episode of The "Eurozone?"

ITV News: Bank's will run out of money, Cash machines will not give out money.

Is this how it all ends, Is this the end of The Euro and Europe.

Links:
News 1
News 2
News 3
News 4
News 5
News 6

Is this the end of The Euro?

No, its not the end of the euro. The crisis will end with either a default (unlikely) quantitative easing or cash transfers/debt forgiveness. My bet is on the latter, the can will be kicked continually down the road until all greek debt is to the EU/IMF and little to the banks. The debt will then be written down.

Solnskaya

Doubtful.

Mr Trade In

Wouldn't debt forgiveness be default by another name?

oppenheimer1

Mr Trade In wrote: »

Wouldn't debt forgiveness be default by another name?

It would depend on what way they go about it. If Greece is given the money to pay off its loans then it wouldn't be a default. If Greece creditors decide not to fulfil their contracts voluntarily and don't activate the credit default swap then it wouldn't be a feared "credit event". The latter could only realistically happen if other Eurozone governments or the EU, who at that stage would hold the majority of greek bonds, made a political decision to pursue that option.

I have little doubt about it that its a transfer union we're heading towards. QE is also an option though.

recedite

oppenheimer1 wrote: »

I have little doubt about it that its a transfer union we're heading towards..

....with a harmonised fiscal policy? ie a Dept. of Finance.

bcmf

But will the Eurozone continue to bail out Greece now that they need a 2nd bailout and given the measures the Greeks have to take get their economy in an anywhere near decent state to start paying back will effectivley bring the Greek economy to its knees.
What happens in 6-9mnths if the Greeks dont get it sorted and they come looking for a 3rd bailout.
Kicking the can down the road is fine ( and neccessary) but what happens when the can is so battered it just falls a part and there is nothing left to kick?
I know that at this stage if one of the Euro countries default then its game over but how long more can it go on.

tara73

oppenheimer1 wrote: »

No, its not the end of the euro. The crisis will end with either a default (unlikely) quantitative easing or cash transfers/debt forgiveness. My bet is on the latter, the can will be kicked continually down the road until all greek debt is to the EU/IMF and little to the banks. The debt will then be written down.

this is what I often think or hope. the money isn't there in value, just numbers written in ink on paper. so it sounds like the best/smartest or almost logical way for me but is it really doable in this financial interdependent net around the world??

dan_d

bcmf wrote: »

But will the Eurozone continue to bail out Greece now that they need a 2nd bailout and given the measures the Greeks have to take get their economy in an anywhere near decent state to start paying back will effectivley bring the Greek economy to its knees.
What happens in 6-9mnths if the Greeks dont get it sorted and they come looking for a 3rd bailout.
Kicking the can down the road is fine ( and neccessary) but what happens when the can is so battered it just falls a part and there is nothing left to kick?
I know that at this stage if one of the Euro countries default then its game over but how long more can it go on.

As long as it likes.
People will do anything to make what has to happen, happen. By "people" here I mean politicians - European, Irish, Whatever. And bankers.
They are literally re-writing the rules on this thing by the week. We know what the rules are from the past 2 years, but that's not to say they won't change.
The point that people seem to totally overlook here is that they will not let Euro fail without exhausting every available solution/method/avenue/opportunity to save it. What's happening is not cast in stone. In fact, I don't think there IS a precedent for this.
I agree with Oppenheimer. When they've exhausted most of the other options, I imagine that at least part of the permanent solution will be to simple write off some (or all) of the debt. We already see it here - 2 years of non-stop " WE WILL NOT BURN THE BONDHOLDERS", and in the last few weeks..."Well actually, we won't technically burn you, but you'll have to take your losses and chose the best of a bad lot from the choices we're going to offer you because we just can't afford anything else".
It's no longer as simple as will they pay/will they default. I'm not sure it was ever that simple, but I'm pretty sure it isn't now anyway.

Scofflaw

dan_d wrote: »

As long as it likes.
People will do anything to make what has to happen, happen. By "people" here I mean politicians - European, Irish, Whatever. And bankers.
They are literally re-writing the rules on this thing by the week. We know what the rules are from the past 2 years, but that's not to say they won't change.
The point that people seem to totally overlook here is that they will not let Euro fail without exhausting every available solution/method/avenue/opportunity to save it. What's happening is not cast in stone. In fact, I don't think there IS a precedent for this.
I agree with Oppenheimer. When they've exhausted most of the other options, I imagine that at least part of the permanent solution will be to simple write off some (or all) of the debt. We already see it here - 2 years of non-stop " WE WILL NOT BURN THE BONDHOLDERS", and in the last few weeks..."Well actually, we won't technically burn you, but you'll have to take your losses and chose the best of a bad lot from the choices we're going to offer you because we just can't afford anything else".
It's no longer as simple as will they pay/will they default. I'm not sure it was ever that simple, but I'm pretty sure it isn't now anyway.

And that, in turn, keeps the markets worried.

cordially,
Scofflaw

The_Thing

RobitTV wrote: »

Is this the end of The Euro?

No, at least not before McWilliams makes an appearance in a few more annoying ads.

Count Dooku

RobitTV wrote: »

If Greece defaults, We all default with it!

We go down with greece.

So is this the Final episode of The "Eurozone?"

ITV News: Bank's will run out of money, Cash machines will not give out money.

Is this how it all ends, Is this the end of The Euro and Europe.

Links:
News 1
News 2
News 3
News 4
News 5
News 6

Is this the end of The Euro?

not yet,but Germany must be expelled from Euro
Why Germany must exit the euro

SupaNova

not yet,but Germany must be expelled from Euro
Why Germany must exit the euro

This might sound counter-intuitive. Germany, after all, has an enormous current account surplus; it honed its productivity and competitiveness over the past decade; where Greece borrowed it saved, where Spain splurged it cut, where Ireland inflated it deflated. But that is precisely the problem. Were Keynes around today he would have identified the issue instantly: in any monetary system, nursing a mammoth current account surplus can be just as destabilising as a deficit.

Lol blame those pesky over productive Germans. The Keynesian view is backward as usual. They can't seriously blame people producing and being sensible while in the same sentence describing all the real problems that actually cause the mess.

dan_d

Scofflaw wrote: »

And that, in turn, keeps the markets worried.

cordially,
Scofflaw

Which, in turn, keeps the decision makers thinking. And changing the rules.

It's a vicious circle. Grr...:p

recedite

SupaNova wrote: »

Lol blame those pesky over productive Germans. The Keynesian view is backward as usual. They can't seriously blame people producing and being sensible while in the same sentence describing all the real problems that actually cause the mess.

The article is not criticising the German way of doing things, it just points out that they have built up a credit imbalance within eurozone (pretty much as the Chinese are doing worldwide).

My solution would be to give a free holiday voucher to everyone in Germany, redeemable only in Greece, Ireland, or Portugal.
If the total vouchers amount = German contribution to the bailout money, then credit system is rebalanced. No moral hazard. Germans get to chill out for a change, and the bailout recipients get some service industry work.

amacca

recedite wrote: »

Germans get to chill out for a change, and the bailout recipients get some service industry work.

yeah, those Germans are waay too uptight.....I might even slip something in their food when they come to my restaurant....just to relax them maan:D

but what if we don't want to go your country you little pixie headed irish?

tara73

recedite wrote: »

My solution would be to give a free holiday voucher to everyone in Germany, redeemable only in Greece, Ireland, or Portugal.
If the total vouchers amount = German contribution to the bailout money, then credit system is rebalanced. No moral hazard. Germans get to chill out for a change, and the bailout recipients get some service industry work.

that's a terrific idea. but how to make sure the money is not spend on the liquid stuff and bad bubble investments again???:)

easychair

Ireland can learn from Zimbabwe how to help solve this situation, and follow Zim's example. Ireland should leave the Euro and join the US$, which would free Ireland from the political decisions made by the EU, ( which are disasterous for the irish economy), and able to deal solely with the IMF which is not politically driven, and is only interested in economic solutions. From observation, it seems the EU is interested in bullying Ireland into what is best for the EU, and not what is best for Ireland.

Ireland should get out of the Euro now, while it can, and before it is too late and the Euro slides into eventual, and inevitable, melt down.

oppenheimer1

easychair wrote: »

Ireland can learn from Zimbabwe how to help solve this situation, and follow Zim's example. Ireland should leave the Euro and join the US$, which would free Ireland from the political decisions made by the EU, ( which are disasterous for the irish economy), and able to deal solely with the IMF which is not politically driven, and is only interested in economic solutions. From observation, it seems the EU is interested in bullying Ireland into what is best for the EU, and not what is best for Ireland.

Ireland should get out of the Euro now, while it can, and before it is too late and the Euro slides into eventual, and inevitable, melt down.

There is no chance Ireland would join the Dollar. If Ireland was to adopt a new currency it would most likely be punts pegged to sterling.

beeftotheheels

easychair wrote: »

Ireland can learn from Zimbabwe how to help solve this situation, and follow Zim's example.

Am I really reading this??? We can learn from Zimbabwe?

While I think Mssers McCreevey and Cowan did us proud in their efforts to destroy our economy, I'm not sure that Fianna Fail could take Zanu PF in that fight.

Given we are not currently suffering from hyperinflation, and one of the big problems for us is being part of a currency which is too strong for us right now, eh NO we could not learn from Zimbabwe (even if there was a lesson on economic management to be learned from Zimbabwe other than "How not to run an economy").

SupaNova

The article is not criticising the German way of doing things, it just points out that they have built up a credit imbalance within eurozone (pretty much as the Chinese are doing worldwide).

My solution would be to give a free holiday voucher to everyone in Germany, redeemable only in Greece, Ireland, or Portugal.
If the total vouchers amount = German contribution to the bailout money, then credit system is rebalanced. No moral hazard. Germans get to chill out for a change, and the bailout recipients get some service industry work.

There is a big difference between the way trade balances work in a single currency than the China US relationship. Lol at the idea tho!

recedite

tara73 wrote: »

that's a terrific idea. but how to make sure the money is not spend on the liquid stuff and bad bubble investments again???:)

They could redeem the vouchers for whatever they liked; the trick is we don't give them a total refund at the end of their stay, like we did last time with the bubble investments (transferring losses to Irish taxpayer).

easychair wrote: »

Ireland should get out of the Euro now, while it can, and before it is too late and the Euro slides into eventual, and inevitable, melt down.

Dollar is heading the same way though, the euro strategy seems to be to keep the € value for long enough to see the $ plummet, before cranking up the € printing presses.

Prakari

The solution is simple. We get another loan of €70 billion from Europe. We give this money out to everyone in the country except three types of people:

1. Bankers: They will either lend the money out creating even more debt, or invest it in speculation where the money gets locked up in the virtual stock market instead of the real economy.
2. Rich people: Because they have already lots of money, they will either save it in a bank (see 1.) or invest it in speculation (see 1.).
3. People who are heavily indebted: They will use too much of the money to pay back their loans. This is bad as every time a principle loan payment is made, that money gets destroyed. There’s no point borrowing money and destroying it through loan payments before it gets a chance to contribute to the economy.

The point is that if we’re going to borrow lots of money from Europe, it is futile throwing it either down into the black hole of the banks or up in the clouds of the virtual stock market. Instead of funnelling money towards the financial institutions we should be diverting it towards the middle and lower class so that they can circulate the money throughout the economy in a way which is debt free.

The Fed in the U.S. has effectively doubled the base money supply since 2008, yet U.S. economic growth is a measly 2%. This is what happens when you give all the money to the banks and the mega corporations. They just use it to play games with each other while the real economy staves.

recedite

I agree with the targeted use of the money, but instead of borrowing it and then giving it to the spenders, we need to find a way to make the German taxpayers give it to them directly, in such a way that the German's feel they are getting something for their money. The old argument that they are getting a peaceful Europe and some sort of redemption for WW2 is getting a bit tired.

SupaNova

recedite wrote: »

I agree with the targeted use of the money, but instead of borrowing it and then giving it to the spenders, we need to find a way to make the German taxpayers give it to them directly, in such a way that the German's feel they are getting something for their money. The old argument that they are getting a peaceful Europe and some sort of redemption for WW2 is getting a bit tired.

How its supposed to work is the spenders have to earn the money they spend.

SupaNova

beeftotheheels wrote: »

Am I really reading this??? We can learn from Zimbabwe?

While I think Mssers McCreevey and Cowan did us proud in their efforts to destroy our economy, I'm not sure that Fianna Fail could take Zanu PF in that fight.

Given we are not currently suffering from hyperinflation, and one of the big problems for us is being part of a currency which is too strong for us right now, eh NO we could not learn from Zimbabwe (even if there was a lesson on economic management to be learned from Zimbabwe other than "How not to run an economy").

How is having a strong currency a problem?

easychair

beeftotheheels wrote: »

Am I really reading this??? We can learn from Zimbabwe?

While I think Mssers McCreevey and Cowan did us proud in their efforts to destroy our economy, I'm not sure that Fianna Fail could take Zanu PF in that fight.

Given we are not currently suffering from hyperinflation, and one of the big problems for us is being part of a currency which is too strong for us right now, eh NO we could not learn from Zimbabwe (even if there was a lesson on economic management to be learned from Zimbabwe other than "How not to run an economy").

No one is lauding Zanu PF who are disgusting. One of our problems is that the EU is still treating this problem as if it’s a political problem, and not an economic one. While Ireland has the Euro, there is nothing we can do about that. If we had the USD the IMF could work with Ireland unimpeded by the agenda of the EU, treat the problem as an economic one, and we’d reach a better solution quicker. The way the EU is handling this is not in the Interests of Ireland.

oppenheimer1 wrote: »

There is no chance Ireland would join the Dollar. If Ireland was to adopt a new currency it would most likely be punts pegged to sterling.

While there might be little chance, it is interesting to speculate. Aim didn’t ask permission and has not officially “joined” the USD, it just adopted it as the currency which people now use in Zim.

recedite

SupaNova wrote: »

How its supposed to work is the spenders have to earn the money they spend.

Its like if you went into a restaurant and had a nice meal. Then when its time to pay the bill you say you have no money. The restaurant might demand that you spend the rest of the night doing the washing-up. That's fair enough, because as long as the credit balance is restored, everybody is happy.

Godge

easychair wrote: »

Ireland can learn from Zimbabwe how to help solve this situation, and follow Zim's example. Ireland should leave the Euro and join the US$, which would free Ireland from the political decisions made by the EU, ( which are disasterous for the irish economy), and able to deal solely with the IMF which is not politically driven, and is only interested in economic solutions. From observation, it seems the EU is interested in bullying Ireland into what is best for the EU, and not what is best for Ireland.

Ireland should get out of the Euro now, while it can, and before it is too late and the Euro slides into eventual, and inevitable, melt down.

Yeah, following Zimbabwe is the one solution. If you don't have an economy, you don't have economic problems:D:D:D:D

SupaNova

recedite wrote: »

Its like if you went into a restaurant and had a nice meal. Then when its time to pay the bill you say you have no money. The restaurant might demand that you spend the rest of the night doing the washing-up. That's fair enough, because as long as the credit balance is restored, everybody is happy.

Or the country with no money can start producing and become competitive, let wages fall. And the country with no money should stop spending more than they have.

Having our own currency and devaluing would be the same thing as letting wages fall while having a strong currency.

motherriley

The Eurozone could be one union one political government just like US states that would solve everything. We could have a good Eurozone government and leader, unlike how it today the governments are useless and so many of them with big pay salaries and so much money spent unnecessary by them, one tax system for all the euro zones. Think of getting rid of all the overpaid useless politicans in Ireland and countries like Greece and others.

Sticky_Fingers

motherriley wrote: »

The Eurozone could be one union one political government just like US states that would solve everything. We could have a good Eurozone government and leader, unlike how it today the governments are useless and so many of them with big pay salaries and so much money spent unnecessary by them, one tax system for all the euro zones. Think of getting rid of all the overpaid useless politicans in Ireland and countries like Greece and others.

So we would have a Franco-German political elite that would run the whole show and not give a feck about the needs of the smaller countries on the periphery. While this would not be massive change to what is currently happening it would be a sad day indeed if countries like our own were forced/tricked into handing over any more sovereignty to Brussels, what is good for Germany/France is not always good for Ireland, the last decade of low interest rates has borne that out explicitly.

recedite

Ask the people in Alaska or California whether they think their needs are ignored by the govt. in Washington.

Tea drinker

Sticky_Fingers wrote: »

So we would have a Franco-German political elite that would run the whole show and not give a feck about the needs of the smaller countries on the periphery. While this would not be massive change to what is currently happening it would be a sad day indeed if countries like our own were forced/tricked into handing over any more sovereignty to Brussels, what is good for Germany/France is not always good for Ireland, the last decade of low interest rates has borne that out explicitly.

The elites will look afte themselves for sure, and if that comes at the expense of France or Germany then they would go on the block too. It's just a lot harder to wrestle Germany or France on to the chopping block.
These elite groups are multinational medusa's with continually changing form and allegiances. Democracy is the sham they hide behind.

thebman

I don't see the logic that we must go down if Greece does.

From what I've been reading, we are not much exposed to a Greek default.

I don't think it would default us, nor even massively increase the amount we'd need to borrow this year to keep afloat from what I've been seeing. In fact, I've seen articles where many are convinced banks across Europe are well equipped to deal with a default of Greece.

I think the US has a bigger problem than Ireland if Greece defaults. Not only will they lose all the bonds but a bankrupt Greece will not be spending a lot on military so it will have other knock on effects for the American economy.

Sticky_Fingers

thebman wrote: »

I don't see the logic that we must go down if Greece does.

From what I've been reading, we are not much exposed to a Greek default.

I don't think it would default us, nor even massively increase the amount we'd need to borrow this year to keep afloat from what I've been seeing. In fact, I've seen articles where many are convinced banks across Europe are well equipped to deal with a default of Greece.

I think the US has a bigger problem than Ireland if Greece defaults. Not only will they lose all the bonds but a bankrupt Greece will not be spending a lot on military so it will have other knock on effects for the American economy.

If Greece tanks I think the main concern would be the knock on effect that it would have on other major Euro countries that are barely hanging on by their fingertips. Ireland, Portugal and Greece are relatively small potatoes in this stew, the real concern would be if the shock of a Greek default would trigger a crisis in Spain or to a lesser extent Italy. These countries are simply too big to fail and if they go looking for a bailout then there is little chance the Euro project will survive IMO.

thebman

Oh I agree Italy is the biggest worry in that regard IMO.

Spain isn't in as bad a shape as the media were trying to make out and Portugal is insignificant.

In reality, Italy is the big question because if Greece were fiddling their books, I can't imagine Italy is much better with Berlisconi in charge and even ignoring that their debt levels are quite high.

later12

I would not be too concerned about Italy. It does have a huge public debt, but most of this is in private hands within Italy. CDS trends imply a risk of default of about 15%, and that is in spite of the Greek likelihood of default rising to about 90% (Thomson Reuters default-probability calculation). A recent Altman Z Score analysis of the Italian corporate sector found that the prospect of significant risk was relatively inconclusive.

Still, it is worth bearing in mind that Mario Draghi is an Italian, and it might be no harm for the PIGS to have a fellow porcine compatriot at the head of the ECB when Msr Trichet switches his whipping cane (or is that a magic wand?) for a fishing rod on the Rhône next September.

murphaph

Italy is incredibly backward and uncompetitive IMO.

Spent 2 weeks there on holidays (I know I know, you can't judge an economy based on that) and tbh it was shocking how inefficient things are. EVERY petrol station we used (when open-most, even on the motorway are closed at night and on Sunday!) had an attendant. In the motorway service areas you have to pick out what you want to eat, pay at a till to get a receipt, then go and give the receipt to another guy who gives you your sandwiches!

I was watching (german) news reports on the Greek crisis in the evenings in the hotel thinking, man, Ireland can get out of this mess. We have a generally hard working population (few wasters alright, they need tackling) and are (I imagine) a more productive nation than either Italy or Greece (and probably Portugal too).

Ireland's big problem is our over indulgence in the property market. We can get our wages down (is already happening and is being reported in German TV news that we are getting things in order) and we can get our government spending (welfare, public sector pay) down further. The likes of Italy and Greece have deep systemic problems like rampant tax evasion that is simply not a big issue in Ireland (relatively speaking).

Personally I think a Greek default (assuming it weakens the Euro) will help Ireland as we are an exporting nation (still!).

recedite

Tea drinker wrote: »

The elites will look afte themselves for sure, and if that comes at the expense of France or Germany then they would go on the block too.

Very true. Here's an interesting documentary on how "they" create bubble economies, then suck out the wealth at the expense of local taxpayers.
Libertarian heroes Ayn Rand and Alan Greenspan are featured, but not directly blamed. Theirs is the sin of omission, much like our own last govt.

https://www.youtube.com/watch?v=Uz2j3BhL47c

The King of the Known Universe

In the papers a while back they were saying it's only a matter of time before we default. The EU can't keep handing out billions to countries every couple of months. It won't work. It's only going to make people hate each other, the EU isn't like America. A Californian's nationality is American so is a Texan's. An Irish person's is Irish but a German's is German. People won't like giving us money.

thebman

The King of the Known Universe wrote: »

In the papers a while back they were saying it's only a matter of time before we default. The EU can't keep handing out billions to countries every couple of months. It won't work. It's only going to make people hate each other, the EU isn't like America. A Californian's nationality is American so is a Texan's. An Irish person's is Irish but a German's is German. People won't like giving us money.

A lot of that isn't exactly honest reporting TBH.

American's are determined to say the Euro won't and can't work. Sure this is a big challenge but polls in Germany even recently show there is a little over 50% support for the loans to other Euro nations so the German's don't have a problem lending the money really as long a they are going to get a return on their investment and the countries being lent to are actually trying to ensure they can pay back the loans.

I don't see that happening in Greece.

SupaNova

recedite wrote: »

Libertarian heroes Ayn Rand and Alan Greenspan are featured, but not directly blamed. Theirs is the sin of omission, much like our own last govt.

https://www.youtube.com/watch?v=Uz2j3BhL47c

Alan Greenspan a Libertarian hero lol.

ardmacha

Italy is incredibly backward and uncompetitive IMO.

That's a bit strong. You were in Campania, but northern Italy has many world class companies.

In the motorway service areas you have to pick out what you want to eat, pay at a till to get a receipt, then go and give the receipt to another guy who gives you your sandwiches!

That's the local way of doing things. It is no more inefficient for the organisation than someone handing you the sandwiches and you paying afterwards. It is slightly inefficient for tourist who doesn't know what is on offer, and has to walk back and forth, but it keeps things honest as everything is paid for and reduces handling of filthy lucre by those serving food.

In Ireland everyone pays different fares every time they use a bus, for goodness sake!

murphaph

ardmacha wrote: »

That's a bit strong. You were in Campania, but northern Italy has many world class companies.

This is true for the "backward" bit but the inefficiencies of paying for some dude to pump your petrol also exist in Northern Italy.

ardmacha wrote: »

That's the local way of doing things. It is no more inefficient for the organisation than someone handing you the sandwiches and you paying afterwards. It is slightly inefficient for tourist who doesn't know what is on offer, and has to walk back and forth, but it keeps things honest as everything is paid for and reduces handling of filthy lucre by those serving food.

In McDonalds they manage to serve you food and take your money without poisoning you. Don't see why a motorway service area should be any different. A pair of disposable gloves for each transaction is required. By the way, I can assure you it wasn't just tourists struggling...my girlfriend is a fluent Italian speaker so she understood the locals' confusion

ardmacha wrote: »

In Ireland everyone pays different fares every time they use a bus, for goodness sake!

Ireland (usually (ex) semi-states and public sector to be fair) have inefficiencies that also need resolving. I didn't have to deal with Italian semi states (thank God), but when their private sector appears to employ extra staff needlessly, then it doesn't bode well.