Is the end nigh for the Euro? [vol. 3]
Discussion
Somebody (sorry, can't find the post right now) mentioned Article 50 recently. This covers notification of the desire to exit the EU and the negotiations that would allow withdrawal to occur.
It seems that there is no legally defined procedure to exit the Euro under any circumstances but the thinking is that exiting the EU would mean such complicated legal ramifications for EZ membership (pretty much impossible), that they would need to make something up under the provision allowed for "making things up" should such a situation arise and be deemed irrecoverable.
The need to do something quickly if withdrawing from a currency and creating a new one would be somewhat at odds with a negotiation process that could in no way happen that quickly nor me kept secret.
It's difficult to see how those constraints (handcuffs?) could allow for an orderly withdrawal so perhaps we should assume that if anything does happen the chances are it will precipitate and disorderly. If so the bureaucracies if fiscal and political operations are unlikely to have any degree of control over "events".
It seems that there is no legally defined procedure to exit the Euro under any circumstances but the thinking is that exiting the EU would mean such complicated legal ramifications for EZ membership (pretty much impossible), that they would need to make something up under the provision allowed for "making things up" should such a situation arise and be deemed irrecoverable.
The need to do something quickly if withdrawing from a currency and creating a new one would be somewhat at odds with a negotiation process that could in no way happen that quickly nor me kept secret.
It's difficult to see how those constraints (handcuffs?) could allow for an orderly withdrawal so perhaps we should assume that if anything does happen the chances are it will precipitate and disorderly. If so the bureaucracies if fiscal and political operations are unlikely to have any degree of control over "events".
Walford said:
So where would this leave a Greek, who was living and working in England, in unskilled employment
That is indeed one of the fundamental questions. Depends on what happens to Greece I think. In theory if they fall out of the EU I cannot see how such induviduals would not require fresh authorisation to remain here at all. If they could achieve that then being in the UK with a job must be better than going to their country of birth. Huge number of questions and no answers as yet? It does look to be ever more likely that Greece will be the first European country to default. Unwelcome this may be but I just cannot see Greece repaying back these debts with interest despite their good intentions. The country simply cannot afford the repayments. Steffan said:
I may well be wrong on this, not for the first or last time, no doubt, as others will be aware, but it seems to me that if Greece decides to pull out of the EZ it is unlikely that they would wish to remain within the EU. I could well be wrong and I am not saying that this is inevitable but I cannot personally see why they would remain within a union which has required actions from Greece in repaying its debts that Greece does not wish, or cannot afford to achieve. I have therefore made the error of taking the two as one which actually tthey are not as AZ and Mrr T have rightly suggested. I therefore do appreciate the efforts of Andy Zarse and Mrr T to remind us of true position.
I do take the point that in theory this is certainly possible, but it seems most unlikely to me. The concept of a bruised and battered country facing desperately serious unknown financial duffuculties alone, essentially actually wshing to remain within a union in which, whoever's fault it may be, that country has been bruised and battered substantially, seems most unlikelyto me. But I do indeed accept that remains a possibility.
Real question here I think is does Greece actually have the ability to repay it's very substantial debts. My experience in Insolvency, which was remarkably educational, indeed, really quite remarkably educational, was that there comes a point when no matter how much the debtor would like to shoulder the debt burden and make restitution, the size of the debts becomes beyond the resources of the debtor. The debtor simply cannot service the debt.
Therefore at that point Insolvency become inevitable. The old phrase "If wishes came true we would all be Kings", does very effectively describe the position of truly insolvent debtors looking for a way out of the box. That sees to me to be the case sadly, for Greece. I cannot see that Greece can sustain such a massive (in relation to the size of the Greek economy) debt. For that reason I have always thought that Greece was on a sticky wicket. Given the ECB decision the sticky wicket has got a great deal stickier. I can only see defaul by Greece coming. No doubt others will be taking a different view.
SteffanI do take the point that in theory this is certainly possible, but it seems most unlikely to me. The concept of a bruised and battered country facing desperately serious unknown financial duffuculties alone, essentially actually wshing to remain within a union in which, whoever's fault it may be, that country has been bruised and battered substantially, seems most unlikelyto me. But I do indeed accept that remains a possibility.
Real question here I think is does Greece actually have the ability to repay it's very substantial debts. My experience in Insolvency, which was remarkably educational, indeed, really quite remarkably educational, was that there comes a point when no matter how much the debtor would like to shoulder the debt burden and make restitution, the size of the debts becomes beyond the resources of the debtor. The debtor simply cannot service the debt.
Therefore at that point Insolvency become inevitable. The old phrase "If wishes came true we would all be Kings", does very effectively describe the position of truly insolvent debtors looking for a way out of the box. That sees to me to be the case sadly, for Greece. I cannot see that Greece can sustain such a massive (in relation to the size of the Greek economy) debt. For that reason I have always thought that Greece was on a sticky wicket. Given the ECB decision the sticky wicket has got a great deal stickier. I can only see defaul by Greece coming. No doubt others will be taking a different view.
I agree with you that Greece will have no option but to exit the EZ. This is clearly not the choice of the Greek people but its also clear
a) The German public will not stand for any debt forgiveness, or reduction in rates,
b) The other bailed out countries would then expect similar treatment,
c) The solvency of financial institutions in the rest of the EU are now not threatened by a default.
The exit will be messy and cause considerable pain.
However, I do not think they will leave the EU because
a) There is really only one way to leave and that is article 50 which takes 2 years minimum.
b) The Cyprus default showed the EU are prepared to be flexible about EU rules so, expect the Greek banks to be nationalised, and the imposition of capital controls.
c) They will then remain entitled to structural aid from the EU.
I would also not expect them to formally default, in saying they will never repay the debts to the EU. but to put a moratorium on payment. Leaving an option to negotiate haircuts later.
Mrr T said:
Steffan said:
I may well be wrong on this, not for the first or last time, no doubt, as others will be aware, but it seems to me that if Greece decides to pull out of the EZ it is unlikely that they would wish to remain within the EU. I could well be wrong and I am not saying that this is inevitable but I cannot personally see why they would remain within a union which has required actions from Greece in repaying its debts that Greece does not wish, or cannot afford to achieve. I have therefore made the error of taking the two as one which actually tthey are not as AZ and Mrr T have rightly suggested. I therefore do appreciate the efforts of Andy Zarse and Mrr T to remind us of true position.
I do take the point that in theory this is certainly possible, but it seems most unlikely to me. The concept of a bruised and battered country facing desperately serious unknown financial duffuculties alone, essentially actually wshing to remain within a union in which, whoever's fault it may be, that country has been bruised and battered substantially, seems most unlikelyto me. But I do indeed accept that remains a possibility.
Real question here I think is does Greece actually have the ability to repay it's very substantial debts. My experience in Insolvency, which was remarkably educational, indeed, really quite remarkably educational, was that there comes a point when no matter how much the debtor would like to shoulder the debt burden and make restitution, the size of the debts becomes beyond the resources of the debtor. The debtor simply cannot service the debt.
Therefore at that point Insolvency become inevitable. The old phrase "If wishes came true we would all be Kings", does very effectively describe the position of truly insolvent debtors looking for a way out of the box. That sees to me to be the case sadly, for Greece. I cannot see that Greece can sustain such a massive (in relation to the size of the Greek economy) debt. For that reason I have always thought that Greece was on a sticky wicket. Given the ECB decision the sticky wicket has got a great deal stickier. I can only see defaul by Greece coming. No doubt others will be taking a different view.
SteffanI do take the point that in theory this is certainly possible, but it seems most unlikely to me. The concept of a bruised and battered country facing desperately serious unknown financial duffuculties alone, essentially actually wshing to remain within a union in which, whoever's fault it may be, that country has been bruised and battered substantially, seems most unlikelyto me. But I do indeed accept that remains a possibility.
Real question here I think is does Greece actually have the ability to repay it's very substantial debts. My experience in Insolvency, which was remarkably educational, indeed, really quite remarkably educational, was that there comes a point when no matter how much the debtor would like to shoulder the debt burden and make restitution, the size of the debts becomes beyond the resources of the debtor. The debtor simply cannot service the debt.
Therefore at that point Insolvency become inevitable. The old phrase "If wishes came true we would all be Kings", does very effectively describe the position of truly insolvent debtors looking for a way out of the box. That sees to me to be the case sadly, for Greece. I cannot see that Greece can sustain such a massive (in relation to the size of the Greek economy) debt. For that reason I have always thought that Greece was on a sticky wicket. Given the ECB decision the sticky wicket has got a great deal stickier. I can only see defaul by Greece coming. No doubt others will be taking a different view.
I agree with you that Greece will have no option but to exit the EZ. This is clearly not the choice of the Greek people but its also clear
a) The German public will not stand for any debt forgiveness, or reduction in rates,
b) The other bailed out countries would then expect similar treatment,
c) The solvency of financial institutions in the rest of the EU are now not threatened by a default.
The exit will be messy and cause considerable pain.
However, I do not think they will leave the EU because
a) There is really only one way to leave and that is article 50 which takes 2 years minimum.
b) The Cyprus default showed the EU are prepared to be flexible about EU rules so, expect the Greek banks to be nationalised, and the imposition of capital controls.
c) They will then remain entitled to structural aid from the EU.
I would also not expect them to formally default, in saying they will never repay the debts to the EU. but to put a moratorium on payment. Leaving an option to negotiate haircuts later.
The whole tenure of the EU chorus seems to be that there will be no further debt reductions. I therefore cannt see further Debt reductions. I can understand why pushing the unwritten off debt into the future might appeal to Greece and the EU. But in reality I think the cuts in the debt that have already been made substantially in the current (until Greece repudiated it ) agreement, make this very unlikely. These debts are already at a much reduced level. If the EU allow further time and accept further cuts on the Greek debts then I think the then obvious looming default approaching and later demanded reductions will cast a large shadow over the EU "solution" and serious doubts would then emerge over the reality of Greece being able to reay these debts.
The EA are having to manage this with a significant number of EU failing sovereign states in very similar financial circumstances all of whom would like a debt reduction. For that reason I think the EU will not accept such a plan because the obvious concessions might then be expected by other EU members. I think the Greece will default. However this is a very tricky call to make.
Steffan said:
That is indeed one of the fundamental questions. Depends on what happens to Greece I think. In theory if they fall out of the EU I cannot see how such induviduals would not require fresh authorisation to remain here at all. If they could achieve that then being in the UK with a job must be better than going to their country of birth. Huge number of questions and no answers as yet? It does look to be ever more likely that Greece will be the first European country to default. Unwelcome this may be but I just cannot see Greece repaying back these debts with interest despite their good intentions. The country simply cannot afford the repayments.
I would suggest the principal of "acquired rights" would apply. So I would expect them to be able to continue working as they do now. I expect they might have to get some sort of certification to prove they have a right to work.Steffan said:
Seems an entirely reasonable proposition to me. However such a moratorium would presumably require interest to be paid on the money's owed. I cannot see how Greece can manage that unless the EU lend it to Greece which will then requre interest on the interest. There comes a point in Insolvency of any organisation no matter how big when the burden of debt becomes too great to repay. I think Greece is well past that point. Promises may be made but I cannt see how Greece could keep those promises nor can I see how Greece can repay either the interest thereon or the capital repayments.
The whole tenure of the EU chorus seems to be that there will be no further debt reductions. I therefore cannt see further Debt reductions. I can understand why pushing the unwritten off debt into the future might appeal to Greece and the EU. But in reality I think the cuts in the debt that have already been made substantially in the current (until Greece repudiated it ) agreement, make this very unlikely. These debts are already at a much reduced level. If the EU allow further time and accept further cuts on the Greek debts then I think the then obvious looming default approaching and later demanded reductions will cast a large shadow over the EU "solution" and serious doubts would then emerge over the reality of Greece being able to reay these debts.
The EA are having to manage this with a significant number of EU failing sovereign states in very similar financial circumstances all of whom would like a debt reduction. For that reason I think the EU will not accept such a plan because the obvious concessions might then be expected by other EU members. I think the Greece will default. However this is a very tricky call to make.
The moratorium would have to cover interest and capital. If would effectively be a default but it would allow some future negotiations. The ECB could then leave the debt on its books at par avoiding a right down and requiring additional capital. The whole tenure of the EU chorus seems to be that there will be no further debt reductions. I therefore cannt see further Debt reductions. I can understand why pushing the unwritten off debt into the future might appeal to Greece and the EU. But in reality I think the cuts in the debt that have already been made substantially in the current (until Greece repudiated it ) agreement, make this very unlikely. These debts are already at a much reduced level. If the EU allow further time and accept further cuts on the Greek debts then I think the then obvious looming default approaching and later demanded reductions will cast a large shadow over the EU "solution" and serious doubts would then emerge over the reality of Greece being able to reay these debts.
The EA are having to manage this with a significant number of EU failing sovereign states in very similar financial circumstances all of whom would like a debt reduction. For that reason I think the EU will not accept such a plan because the obvious concessions might then be expected by other EU members. I think the Greece will default. However this is a very tricky call to make.
Mrr T said:
Steffan - I agree with you that Greece will have no option but to exit the EZ.
You need to put a timeline on that sort of statement, otherwise you're going to end up in the same pickle as Steffan himself, whose "end has been nigh" for so long the dinosaurs probably got to hear about it.Claudia Skies said:
Mrr T said:
Steffan - I agree with you that Greece will have no option but to exit the EZ.
You need to put a timeline on that sort of statement, otherwise you're going to end up in the same pickle as Steffan himself, whose "end has been nigh" for so long the dinosaurs probably got to hear about it.Claudia Skies said:
Mrr T said:
Steffan - I agree with you that Greece will have no option but to exit the EZ.
You need to put a timeline on that sort of statement, otherwise you're going to end up in the same pickle as Steffan himself, whose "end has been nigh" for so long the dinosaurs probably got to hear about it.The title of the thread (as it is now) is an open ended question that has the same validity for discussion every day.
As such it can run and run until people drift away and stop posting. At which point we might assume that interest has been lost and either the Euro has disappeared or has become strong enough for the question to seem implausible.
LongQ said:
Claudia Skies said:
Mrr T said:
Steffan - I agree with you that Greece will have no option but to exit the EZ.
You need to put a timeline on that sort of statement, otherwise you're going to end up in the same pickle as Steffan himself, whose "end has been nigh" for so long the dinosaurs probably got to hear about it.The title of the thread (as it is now) is an open ended question that has the same validity for discussion every day.
As such it can run and run until people drift away and stop posting. At which point we might assume that interest has been lost and either the Euro has disappeared or has become strong enough for the question to seem implausible.
I think we must keep in mind that if any of these failing states actually default there are two clear consequences. Firstly the state itself and it's population are in dire straits economically and may well fail totally as an entity. Secondly the promises if the EU and their "Solution" will have substantially failed. That will have repercussions in Europe that it is difficult to predict. But major repercussions would inevitably follow. Questions on the other states actually being able to recover would fe forced upon the EUand the security of the EU and Eurozone would be visibly weakened.
Such events occur very rarely in life generally. I think it is right and fair to be concerned about what is happenning in the EU. This could have very serious consequences for all EU members and indeed may call into question the whole existing ediface that is the EU. Probably the biggest problem Europe has currently. Hence my concerns.
Mrr T said:
Steffan
However, I do not think they will leave the EU because
a) There is really only one way to leave and that is article 50 which takes 2 years minimum.
b) The Cyprus default showed the EU are prepared to be flexible about EU rules so, expect the Greek banks to be nationalised, and the imposition of capital controls.
c) They will then remain entitled to structural aid from the EU.
I would also not expect them to formally default, in saying they will never repay the debts to the EU. but to put a moratorium on payment. Leaving an option to negotiate haircuts later.
They don't have to default for the pain to begin, they just need to stop following the plan agreed in return for their original bailout (aka austerity), which they've already started to do. We've already seen the first stage of the process whereby the ECB is no longer accepting Greek junk bonds as collateral, the next step will be the withdrawal of all support for Greek banks, followed by not handing over the next chunk of money due under the bail out scheme. The inevitable result will be Greece running out of money to pay teachers/doctors/police etc, even MPs..., and having no choice other than to revert to the New Drachma. By which time technical membership of the EU, or not as the case may be, will be the least of their problems.However, I do not think they will leave the EU because
a) There is really only one way to leave and that is article 50 which takes 2 years minimum.
b) The Cyprus default showed the EU are prepared to be flexible about EU rules so, expect the Greek banks to be nationalised, and the imposition of capital controls.
c) They will then remain entitled to structural aid from the EU.
I would also not expect them to formally default, in saying they will never repay the debts to the EU. but to put a moratorium on payment. Leaving an option to negotiate haircuts later.
Claudia Skies said:
You need to put a timeline on that sort of statement, otherwise you're going to end up in the same pickle as Steffan himself, whose "end has been nigh" for so long the dinosaurs probably got to hear about it.
I expect they died out of boredom whilst waiting for you to explain how Greece can ever pay pack debts of 180% GDP with a smashed and shrinking economy.You've been asked about six times now and keep ignoring the question, I'm assuming because you're find it a little awkward to answer. Just remember, it won't go away...
RYH64E said:
Mrr T said:
Steffan
However, I do not think they will leave the EU because
a) There is really only one way to leave and that is article 50 which takes 2 years minimum.
b) The Cyprus default showed the EU are prepared to be flexible about EU rules so, expect the Greek banks to be nationalised, and the imposition of capital controls.
c) They will then remain entitled to structural aid from the EU.
I would also not expect them to formally default, in saying they will never repay the debts to the EU. but to put a moratorium on payment. Leaving an option to negotiate haircuts later.
They don't have to default for the pain to begin, they just need to stop following the plan agreed in return for their original bailout (aka austerity), which they've already started to do. We've already seen the first stage of the process whereby the ECB is no longer accepting Greek junk bonds as collateral, the next step will be the withdrawal of all support for Greek banks, followed by not handing over the next chunk of money due under the bail out scheme. The inevitable result will be Greece running out of money to pay teachers/doctors/police etc, even MPs..., and having no choice other than to revert to the New Drachma. By which time technical membership of the EU, or not as the case may be, will be the least of their problems.However, I do not think they will leave the EU because
a) There is really only one way to leave and that is article 50 which takes 2 years minimum.
b) The Cyprus default showed the EU are prepared to be flexible about EU rules so, expect the Greek banks to be nationalised, and the imposition of capital controls.
c) They will then remain entitled to structural aid from the EU.
I would also not expect them to formally default, in saying they will never repay the debts to the EU. but to put a moratorium on payment. Leaving an option to negotiate haircuts later.
Unless Greece has a master plan to resolve all their problems default is staring them in the face. Since no one has proposed or suggested that there is such a master plan including Syriza for all their warm words, or indeed any realistic plan. It therefore seems to me that default is highly probable.
Steffan said:
Unless Greece has a master plan to resolve all their problems default is staring them in the face. Since no one has proposed or suggested that there is such a master plan including Syriza for all their warm words, or indeed any realistic plan. It therefore seems to me that default is highly probable.
+1. I think everyone is so tied to their political mast that logical thought is no longer possible! Germany - don't want to write off any debt. EU - wants to expand the EU (no change there). Greece - cannot inflate itself out of debt. The remedy is painfully obvious - perhaps too painful to contemplate but it starts with printing a whole load of new currency. Their tax system (or lack of it) is their problem to sort out. And Portugal should be ordering new notes now because they will be next ..fido said:
+1. I think everyone is so tied to their political mast that logical thought is no longer possible! Germany - don't want to write off any debt. EU - wants to expand the EU (no change there). Greece - cannot inflate itself out of debt. The remedy is painfully obvious - perhaps too painful to contemplate but it starts with printing a whole load of new currency. Their tax system (or lack of it) is their problem to sort out. And Portugal should be ordering new notes now because they will be next ..
I disagree, what we are looking at here is a logical thought being forced upon Greece and the EU, lateral thinking is still possible but the opposing thinking of Greece and the EU cannot continue.Time for a reality check here IMO.
The logical/commercial/dutiful arguments are there for all to see. And these arguments are correct; Greece owes this money. The problem is (as we all know) Greece can’t pay/service this debt – therefore we must move on from this position to the What Happens Now? (And for us interested voyeurs, the speculation of unintended consequences.)
I’m sure everyone on the ‘other’ side of the debt will have considered this situation fully, and latterly will have come to the conclusion that they could live with the consequences of default/Grexit, otherwise there’d be a bit less sabre rattling/turning up the heat, and more jaw jaw. (Gamesmanship fully understood.)
It’s ‘next’ that concerns me (that, and the people of Greece).
Whilst the current political leaders of the remaining PIIGS will be well used to dealing with their less than benevolent masters, the people that vote them into power (accompanied by the growth of anti EU forces within) may well be shocked to the core at the treatment of one of their kin.
I don’t think the Eurogods have quite grasped this.
(Notwithstanding my rant last night, and yes, it was a lovely bottle of plonk!)
TD
The logical/commercial/dutiful arguments are there for all to see. And these arguments are correct; Greece owes this money. The problem is (as we all know) Greece can’t pay/service this debt – therefore we must move on from this position to the What Happens Now? (And for us interested voyeurs, the speculation of unintended consequences.)
I’m sure everyone on the ‘other’ side of the debt will have considered this situation fully, and latterly will have come to the conclusion that they could live with the consequences of default/Grexit, otherwise there’d be a bit less sabre rattling/turning up the heat, and more jaw jaw. (Gamesmanship fully understood.)
It’s ‘next’ that concerns me (that, and the people of Greece).
Whilst the current political leaders of the remaining PIIGS will be well used to dealing with their less than benevolent masters, the people that vote them into power (accompanied by the growth of anti EU forces within) may well be shocked to the core at the treatment of one of their kin.
I don’t think the Eurogods have quite grasped this.
(Notwithstanding my rant last night, and yes, it was a lovely bottle of plonk!)
TD
Right. I don't think the Euro is recovering anytime soon frankly and I'm getting sick of my pay packet taking a hit because of these f
king self indulgent useless commie Greek tts. So Plan B is needed.
I've got a cpl of interesting options to go rape Aus or the Middle East. My question for arguably the most politically economic and socially aware mob on ph (ie. some of you actually have experience of what you are talking about rather than the usual gibbering fkwits on here) is: what price balances the risk of whoring yourself to the ME?
Or do our more European favouring gents on here see some light for the Euro and the exchange rate to recover anytime soon? I freely admit I only see pain for it for at least the next quarter.
Steffan...what are your Italian plans for say April time in a cpl of months? I plan on bringing the 55 over and given your over indulgence of life so far I figure you would rather die having a heart attack north of 100leptons in Italian spring sunshine than boring old age
king self indulgent useless commie Greek tts. So Plan B is needed.I've got a cpl of interesting options to go rape Aus or the Middle East. My question for arguably the most politically economic and socially aware mob on ph (ie. some of you actually have experience of what you are talking about rather than the usual gibbering f
kwits on here) is: what price balances the risk of whoring yourself to the ME? Or do our more European favouring gents on here see some light for the Euro and the exchange rate to recover anytime soon? I freely admit I only see pain for it for at least the next quarter.
Steffan...what are your Italian plans for say April time in a cpl of months? I plan on bringing the 55 over and given your over indulgence of life so far I figure you would rather die having a heart attack north of 100leptons in Italian spring sunshine than boring old age
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