3 months to save the Euro according to Legarde & Soros

golfwallah wrote: »

Christine Legarde tells CNN that action (in the form of clear political will) is needed within 3 months to save the Euro:

http://edition.cnn.com/video/#/video/international/2012/06/12/amanpour-lagarde-eurozone-save-euro.cnn

She goes on to say that what is needed is a combination of gradual debt reduction and growth.

Precisely how should this “clear political will” be demonstrated and what form of real action should be implemented in the forthcoming month to save the Euro?

We’ve started in Ireland, but are we doing enough?

Thoughts welcome.

According to the economist the Germans still don't get that they will be affected by the collapse of the Euro.

http://www.economist.com/blogs/freeexchange/2012/06/germans

Until they accept that they are in harms way, nothing is likely to change. While I can understand their current belief that they are a prudent country and why should they have to bail out the extravagant PIIGS (to use I term I personally dislike). However they were the first to break the same rules that they are now deriding other countries for breaking. I am not a fan of German bashing for the sake of it, although they are at the helm and need to change course.

jonniebgood1 wrote: »

We were told last december that the Euro would come to an end within weeks unless decisive action was taken. The same rhetoric is being spouted now . Perhaps an interesting thought would be whether 'saving' the euro is actually of benefit at this stage. If the euro is saved it means years of slow and painful austerity budgets. If the euro were to end it would mean a short sharp adjustment after which things would stabilise within 6 months. A sharp adjustment like this might allow us to sort out the real inequalities in society.

Yeah I don't know why people are worrying.
Shure aren't we going to have a "banking union", then there is the fiscal treaty and shure as can be shown in another thread here, all these bank failures are costing nothing, so don't worry about the Spanish banks failing.
Spain isn't that big and can be bailed out, then Italy and shure aren't the peoples of Europe crying out for more austerity like the Greeks have. :rolleyes:

AFAIk wasn't the little boy that cried wolf eventually telling the truth ?

jmayo wrote: »

Yeah I don't know why people are worrying.
Shure aren't we going to have a "banking union", then there is the fiscal treaty and shure as can be shown in another thread here, all these bank failures are costing nothing, so don't worry about the Spanish banks failing.
Spain isn't that big and can be bailed out, then Italy and shure aren't the peoples of Europe crying out for more austerity like the Greeks have. :rolleyes:

AFAIk wasn't the little boy that cried wolf eventually telling the truth ?

Would you not ask the question why people are creating the fear about the end of the euro as opposed to the more incredulous situation of believing everything you hear...

Some people might say that the boy who called wolf, got his comeuppance.

jonniebgood1 wrote: »

If the euro is saved it means years of slow and painful austerity budgets.

And a leaving the euro wouldn't be painful for years?

jonniebgood1 wrote: »

IIf the euro were to end it would mean a short sharp adjustment after which things would stabilise within 6 months.

You promise?

jonniebgood1 wrote: »

A sharp adjustment like this might allow us to sort out the real inequalities in society.

I'm sure when everyone was poor we'd be a much more equitable place.

jonniebgood1 wrote: »

Would you not ask the question why people are creating the fear about the end of the euro as opposed to the more incredulous situation of believing everything you hear...

Some people might say that the boy who called wolf, got his comeuppance.

I'd imagine people are afraid as it would actually cause the shít to hit the fan. You'll find very few commentators who believe otherwise.

hyperborean wrote: »

Nope, please elaborate on what makes you think that there would be a 6 month period of adjustment before a period of growth should the Euro collapse, I really am interested?

There would be a period of adjustment for all industry & commerce. If we are talking about a wide area then we are not talking about chaos for 5 years as people will have to get on with things (I would be interested in how you see 3-5 years being the applicable time period given that after WWII the real economies even after complete destruction had been re-established within months). It is realistic that without the infrastructure being removed that it will in the short term continue and absord the changes. I think 6 months is a fair estimate.

jonniebgood1 wrote: »

It would allow 1 large adjustment as opposed to years of it so no.

Of sure I agree there would be one large adjustment, the issue I was is the long term consequences of that adjustment. All cuts take money out of the economy which in turn leads to less tax revenue which leads to more cuts and so on. Scofflaw posted a while back about the risk of going into a downward spiral of cuts, he put it very well, can't find it at the moment.

jonniebgood1 wrote: »

You are correct of course- it is unproven opinion. The same can be said for the armageddon predictions.

It's like playing Russian roulette while saying "what can possibly go wrong" and "sure it couldn't be worse". Lots could go wrong and yes it could get a lot worse.

jonniebgood1 wrote: »

But we'd be happy:pac:

Yeah it'll be great being poor and miserable... sorry I mean happy again. Perhaps we can dig up DeValera and re-elect him while were at it.

jonniebgood1 wrote: »

Commentators believe the **** would hit the fan???
Do you promise this would happen (to ask you your own question)

I find it very hard to believe that a punt nua wouldn't fall by at least 30% on the markets. That means some lovely cold winters for a large chunk of the population with that very expensive imported oil. But they'll only be the poor, the large numbers of unemployed and the elderly so who cares.

meglome wrote: »

Of sure I agree there would be one large adjustment, the issue I was is the long term consequences of that adjustment. All cuts take money out of the economy which in turn leads to less tax revenue which leads to more cuts and so on. Scofflaw posted a while back about the risk of going into a downward spiral of cuts, he put it very well, can't find it at the moment.

Are we not in a downward spiral of cuts?

meglome wrote: »

I find it very hard to believe that a punt nua wouldn't fall by at least 30% on the markets. That means some lovely cold winters for a large chunk of the population with that very expensive imported oil. But they'll only be the poor, the large numbers of unemployed and the elderly so who cares.

Oil should not be a determining factor but if you want to use it as an example then fine- it needs to be considered. The discussion is in relation to the euro first of all, not just Ireland exiting the Euro. This gives a better position to start with as the market would logically need to cater for the continent. The impact of oil would be important but you should not forget that oil prices have risen by over 50% in the past few years, a larger defferencial than your 30% estimate.

jonniebgood1 wrote: »

Are we not in a downward spiral of cuts?

There are cuts but no downward spiral. They're keeping a reasonable balance so far.

jonniebgood1 wrote: »

Oil should not be a determining factor but if you want to use it as an example then fine- it needs to be considered. The discussion is in relation to the euro first of all, not just Ireland exiting the Euro. This gives a better position to start with as the market would logically need to cater for the continent. The impact of oil would be important but you should not forget that oil prices have risen by over 50% in the past few years, a larger defferencial than your 30% estimate.

You're making my point though. Yes oil prices have gone up by 50% but we've had large increases in social welfare, wages and pensions since 2000, way more than inflation. So we can absorb those increases to a degree. But if social welfare and pensions are cut by 40% and prices also go up by 30% then people are going to be very cold. Especially the ones who are now on the streets.

jonniebgood1 wrote: »

Would you not ask the question why people are creating the fear about the end of the euro as opposed to the more incredulous situation of believing everything you hear...

As that famous spoof analyst commented on TV, there are people who will make money either way the market goes.
It is probably advantageous for some if the Euro does go pear shaped.

There is a real justifiable fear that the Euro will collapse and claiming otherwise is incredulous.
Some answer the fears by claiming it is too big to fail and that Germany won't allow it.
Well nothing is too big to fail and so far the Germans have allowed a lot happen.
There is all the waffle emminating from the EU about grand plans to ensure this situation never happens again, meanwhile people are ignoring the current situation as it slowly drags on.
That type of thinking rarely works out well.

jonniebgood1 wrote: »

Some people might say that the boy who called wolf, got his comeuppance.

And some might say the ones who dismissed him got their come uppance.

NIMAN wrote: »

But what about the massive debts countries have racked up, especially us.

Do you think that if the Euro collapses then we don't have to pay this back (meaning austerity for many many years)?

The end of the Euro will not mean the end of debt.

As for the Doomsday situation that people mention, who really knows what will happen if there is an uncontrolled collapse of the Euro? But one thing is for sure, its no good Britain, the US and China watching from the wings thinking they're on safe ground. If we go, then we're all going belly up. There will be an immediate impact on the UK and US trade, and China will suffer big as no-one is going to buy their cheap tat any more.

How Can a Non-Existent Entity Bailout Spain... Or Anyone Else For That Matter?

Spain's Bailout is one big lie.

No one is asking just where this money will come from
The IMF isn't involved. Nor is the ECB.

The EFSF, which can't even raise €10 billion without having to step in to insure it doesn't have a failed bond auction isn't a possibility (Germany doesn't want it).

That leaves just the European Stability Mechanism (ESM)... except for the little known fact that only FOUR of the necessary 17 EU members have ratified legislation to even CREATE the ESM.
The ESM doesn't even EXIST yet.

On top of this, Spain and Italy make up 30% of the ESM's supposed "funding." That's right, nearly one third of the mega-bailout fund's capital will come from countries that are bankrupt themselves and are either already requesting bailouts (Spain) or soon will be (Italy).

Finally, and this is the REAL problem with the ESM... Germany hasn't OK'd it yet. In fact, German opposition leaders have stated point blank that hoping for Germany to ratify the ESM before its due date (July 1) is "completely unrealistic."

So... Spain is going to be bailed out by a non-existent entity whose leading member likely won't even have ratified its formation... before July 1.

Sure things could play out differently. But wasn't Spain literally on the verge of a systemic Crisis? And we're talking about weeks... possibly months before it gets a single Euro in bailout funds (assuming the funds even show up at all).

So I ask again... WHERE is the money going to come from? It doesn't exist. The whole Bailout is one big lie. The funds simply are not there.

Even if they were, €100 billion is NOTHING compared to the REAL capital needs of Spanish banks. Bankia alone needs €24 billion... and that's just ONE BANK out of Spain's €3 trillion banking system.

If you think we're out of the storm yet in Europe, you're in for a very VERY rude surprise. It's quite likely the EU won't even exist in its current form before the summer ends.

The simple reason... THERE AREN'T ANY FUNDS LEFT TO PROP UP the €46 TRILLION toxic sewer that is the EU banking system.

As for the UK and the US sitting on the sidelines :rolleyes:
They are in an even worse situation, they are like the bold school kids, keeping their head down while their buddy takes the rap (for now).
This whole mess will come home to roost where it started, their turn is coming and soon. When it does all hell will hit the fan - we will have a inflationary depression thanks to all the debt and the endless printing of money. Just MHO, so don't blast me for it.

Im not looking for a doomsday situation, I just think its staring us right in the face. I cant see any other way out
- We cant grow out of it (FAR too much debt)
- We cant print our way out of it (but they will try)
- And I don't see any hunger for debt right off (until it all too late)

Interesting times

golfwallah wrote: »

Ain’t it funny how quickly a discussion on how to save the Euro can quickly focus mainly on the impact of its collapse?

Saving the Euro can’t be down solely to what Angela Merkel and the German population want or are used to – other countries, including ourselves, also have responsibilities – if we want economic stability.

It’s almost as if the actions / changes needed in each country are ok for the Germans but “too hard” for the rest. It’s much easier to label all changes as “austerity”, when in reality these changes are a combination of reducing avoidable costs (with the minimum possible impact on the majority and vulnerable people who can’t help themselves) and increasing government income through taxation, etc.

It seems to me that helping ourselves is the best option – even if this means living up to the conditions to which we ourselves (i.e. the state acting on our behalf) have agreed in the EU/IMF MOU of December 2010 and subsequent quarterly progress reports.

Inertia or doing nothing is always the preferred option – it avoids the problem of upsetting some people in the short term. Unfortunately, it leaves us with the existing and growing debt problem that will affect everyone in the long term.

As always, it’s about choice. There are things each country can do – very few of these things are universally popular. I’m not sure if there are any proposals on carbon taxes in the EU/IMF Programme for Financial Support for Ireland, but Christine Lagarde thinks this is one of the “decisive steps” that could be taken: http://articles.economictimes.indiatimes.com/2012-06-13/news/32215449_1_euro-zone-financial-stability-pricing.

And, no, I’m not Enda.

Agreed as well. To show I do actually have a +ve view on this!

Germans are pretty upset as all the bailouts on what they perceive as wasteful, inefficient and lazy countries who dont really deserve to be bailed out. And to a degree they have a good point.

Ireland has an incredibly wasteful and beaurocraticly complex state network that could easily be cut if we took a very pragmatic and hard headed approach.

Starting from the top down at TDs wages and obscene salaries and expenses to getting rid of the silly charges they pay for biscuits and cleaning. Massive simplification of our state bodies.

We need to have a huge debate on wat exactly a government should provide and the extent of their powers. We cannot have it all unless we are willing to pay for it. Tax revenues should alwasys provide a % surplus IMHO for rainy day funds and replacment of essential items like infrastructure akin to a sinking fund that managment companies must provide.

There are hard decisions to be made in how we reconcile the -ve costs of rural ireland with the eastern belt and other large towns and cities that are cost effective due to scales of economy.

Local coco's should be all but abolished as the duplication across all counties is simply sickening and totally inefficient (and zero democratic.) Instead we could divide the country into say a 6 distinct regions that have elected officals to govern pulled from the residents who live there. They would be ltd companies and bound by company law to provide services.

The quango and currently unaccountable state must die and be reborn but it can be done.

Our beloved leader Enda is nothing more than an interim caretaker who having being in politics for his entire life has no vision or ability to see what must be done.

Last line is the thruth
" At this juncture almost any price is worth paying to prevent collapse."

This is why masive printing, "world rescue package", QE, call it what you like, WILL happen. Iflation (higher) will follow. Governments currently trying to say inflation is low :eek:, the man on the street can see through that !
So what sort of real inflation figures will we have when the printing really ramps up ? A depression, along with high inflation rates, low interest rates, and further falling house prices. Punish the savers, tax payers, and pay the banks Ain't going to work.

I don't believe that fiscal union will work within the Euro, with is current membership.