Is the end nigh for the Euro? [vol. 2]
Discussion
bosscerbera said:
Mermaid said:
So will it be Greece that makes the headlines from now, or France or Spain?
FiGS? 
http://www.ekathimerini.com/4dcgi/_w_articles_wsit...
"On his upcoming talks to explore whether he will be able to form a majority coalition with parties of the left and parties representing environmental concerns, the head of SYRIZA -- which gleaned 16.78 percent at the ballot box and won 52 seats in the 300-seat Parliament -- laid out the five points that will be the focus of discussions:
- The immediate cancellation of all impending measures that will impoverish Greeks further, such as cuts to pensions and salaries.
- The immediate cancellation of all impending measures that undermine fundamental workers' rights, such as the abolition of collective labour agreements.
- The immediate abolition of a law granting MPs immunity from prosecution, reform of the electoral law and a general overhaul of the political system.
- An investigation into Greek banks, and the immediate publication of the audit performed on the Greek banking sector by BlackRock.
- The setting up of an international auditing committee to investigate the causes of Greece's public deficit, with a moratorium on all debt servicing until the findings of the audit are published.
It's all going to end in tears isn't it! (except for point 3 which is eminently sensible).
The Greek election hasnt changed anything though. Greece is in exactly the same situation it was in last week, the week before that, the month before that and last year.
Its evens whether the next chaps in line can form a govt and if they cant then Pasok as 3rd choice wont be able to either and then we are back to another snap election. This was always going to be the outcome for the Greek elections resulting in stalemate. The same gridlock of despair thats been existing in Greece will continue because they only have 2 options: cut as hard and deep as is demanded for them to get their bailout money or leave the Euro. Same then, same now. So the politics doesnt influence the financials and its the consequences of those financial outcomes that determines the impact outside of Greece.
Sorry, option 3: return of Greek military rule. All bets are off then.
Its evens whether the next chaps in line can form a govt and if they cant then Pasok as 3rd choice wont be able to either and then we are back to another snap election. This was always going to be the outcome for the Greek elections resulting in stalemate. The same gridlock of despair thats been existing in Greece will continue because they only have 2 options: cut as hard and deep as is demanded for them to get their bailout money or leave the Euro. Same then, same now. So the politics doesnt influence the financials and its the consequences of those financial outcomes that determines the impact outside of Greece.
Sorry, option 3: return of Greek military rule. All bets are off then.
DJRC said:
The Greek election hasnt changed anything though. Greece is in exactly the same situation it was in last week, the week before that, the month before that and last year.
Its evens whether the next chaps in line can form a govt and if they cant then Pasok as 3rd choice wont be able to either and then we are back to another snap election. This was always going to be the outcome for the Greek elections resulting in stalemate. The same gridlock of despair thats been existing in Greece will continue because they only have 2 options: cut as hard and deep as is demanded for them to get their bailout money or leave the Euro. Same then, same now. So the politics doesnt influence the financials and its the consequences of those financial outcomes that determines the impact outside of Greece.
Sorry, option 3: return of Greek military rule. All bets are off then.
Given the utter mess they're in, Greek military rule wouldn't make any difference I don't think! Its evens whether the next chaps in line can form a govt and if they cant then Pasok as 3rd choice wont be able to either and then we are back to another snap election. This was always going to be the outcome for the Greek elections resulting in stalemate. The same gridlock of despair thats been existing in Greece will continue because they only have 2 options: cut as hard and deep as is demanded for them to get their bailout money or leave the Euro. Same then, same now. So the politics doesnt influence the financials and its the consequences of those financial outcomes that determines the impact outside of Greece.
Sorry, option 3: return of Greek military rule. All bets are off then.
If you want to be so binary about things fair enough, you are quite right in your analysis of the two possible outcomes. I've never disagreed with you over that. Where you are wrong is that the election has changed the direction of the game. There will be a different result; Greece leaving the Euro.
Even twelve months ago most folk would have assumed the coalition would be maintained, now it's all changed.
- Before election: Pasok/ND = More cuts, more bailout funds, keep on right side of Europe/ECB, stay in the Euro.
- After election: Trots = No more cuts, two fingers to the banks/EU/ECB... but stay in the Euro
If the Greeks had voted to keep the Pasok/ND coalition then there would have been no question at all that the first option would apply, the EUdiots would still be carrying on as per last week/month/year, as would the banks. Just ask Baroso or Rumpy if they'd rather ND had won enough seats to form a workable Govt.
In the unlikely event the Trots manage to form a cohesive Govt, they WILL NOT bail out the banks or impose more cuts and if that means leaving the Euro then I suspect they'll feel it's the lesser of two evils. And that is a step change to the previous state of affairs, and all due to the election.
Andy Zarse said:
This is Shaun Richard's banking timeline, and describes the process of bank rescues. I posted it here in October last year when Franco-Belgian Dexia Bank was going under. I think Bankia has now got to point 6, other Spanish banks are between points 4 to 5. It is remarkably accurate, Belgium/Dexia is now at point 11...
1. The Board issues a statement accusing bloggers of spreading both irresponsible and factually incorrect rumours as the bank is sound and has no need of new capital.
2. The Bank issues a statement of confidence in its management.
3. The Bank tries to raise more private capital in spite of it having no need for it.
4. If this does not work the relevant government expresses complete confidence in the bank and tell us that it has a sound management structure and business model.
5. The relevant government tells us that they are stepping in to help the bank but the problems are both minor and short-term and are of no public concern.
6. The relevant government tells us that the bank needs taxpayer support but through clever use of special purpose vehicles there will be no cost and indeed a profit is virtually certain.
7.Part-nationalisation of the bank is announced and taxpayers are told that a profit will result from this sound and wise investment.
8. Full nationalisation is announced to the sound of teeth being pulled without any anaesthetic.
9. Debt costs of the relevant sovereign nation rises.
10. Consequently that nation finds that its credit rating is downgraded.
11. It is announced that due to difficult financial times public spending needs to be trimmed and taxes such as Value Added Tax need to be raised. It is also announced that nobody could possibly have forseen this and that nobody is to blame apart from some irresponsible rumour mongers who are the equivalent of terrorists. A new law is mooted to help stop such financial terrorism from ever happening again.
12. Some members of the press inform us that bank directors were both “able and skilled” and that none of the blame can possibly be put down to them as they get a new highly paid job elsewhere.
13. Former bank directors often leave the new job due to “unforseen difficulties”.
In a nutshell classic post of the thread which has stood 2 volumes and a fair few months!1. The Board issues a statement accusing bloggers of spreading both irresponsible and factually incorrect rumours as the bank is sound and has no need of new capital.
2. The Bank issues a statement of confidence in its management.
3. The Bank tries to raise more private capital in spite of it having no need for it.
4. If this does not work the relevant government expresses complete confidence in the bank and tell us that it has a sound management structure and business model.
5. The relevant government tells us that they are stepping in to help the bank but the problems are both minor and short-term and are of no public concern.
6. The relevant government tells us that the bank needs taxpayer support but through clever use of special purpose vehicles there will be no cost and indeed a profit is virtually certain.
7.Part-nationalisation of the bank is announced and taxpayers are told that a profit will result from this sound and wise investment.
8. Full nationalisation is announced to the sound of teeth being pulled without any anaesthetic.
9. Debt costs of the relevant sovereign nation rises.
10. Consequently that nation finds that its credit rating is downgraded.
11. It is announced that due to difficult financial times public spending needs to be trimmed and taxes such as Value Added Tax need to be raised. It is also announced that nobody could possibly have forseen this and that nobody is to blame apart from some irresponsible rumour mongers who are the equivalent of terrorists. A new law is mooted to help stop such financial terrorism from ever happening again.
12. Some members of the press inform us that bank directors were both “able and skilled” and that none of the blame can possibly be put down to them as they get a new highly paid job elsewhere.
13. Former bank directors often leave the new job due to “unforseen difficulties”.
Steffan said:
I particularly like the demand to suspend all debt servicing.
Sounds just like a default notice to me.
Steffan in any other walk of life or buisness I am certain various aspects of "the tail wagging the dog" we see here Would Im sure be either illegal or at best cause the debtor(s) nation to be wound up.Sounds just like a default notice to me.
I think us mere mortals can be made bankrupt these days for £800 or so.
How have they been lent more whilst unable to service loan repayments prior??
Beats me!
coyft said:
I don't really think the election has changed anything. The simple fact is that Greece can not compete with Germany, it suited both Government's political ambitions to maintain the charade. That charade has now come to an end and we come back to the fundamentals, Greece can not compete with Germany. It's not in the same league, it's a bit like football, they got promoted to the premier league, now they need to go back to division one. Unfortunately for Greece there is no parachute payment to soften the blow.
I dont agree here, I dont belive they wanted to compete with Germany but just wanted her as a vehicle to extricate cash from...what do I know.Andy Zarse said:
DJRC said:
The Greek election hasnt changed anything though. Greece is in exactly the same situation it was in last week, the week before that, the month before that and last year.
Its evens whether the next chaps in line can form a govt and if they cant then Pasok as 3rd choice wont be able to either and then we are back to another snap election. This was always going to be the outcome for the Greek elections resulting in stalemate. The same gridlock of despair thats been existing in Greece will continue because they only have 2 options: cut as hard and deep as is demanded for them to get their bailout money or leave the Euro. Same then, same now. So the politics doesnt influence the financials and its the consequences of those financial outcomes that determines the impact outside of Greece.
Sorry, option 3: return of Greek military rule. All bets are off then.
Given the utter mess they're in, Greek military rule wouldn't make any difference I don't think! Its evens whether the next chaps in line can form a govt and if they cant then Pasok as 3rd choice wont be able to either and then we are back to another snap election. This was always going to be the outcome for the Greek elections resulting in stalemate. The same gridlock of despair thats been existing in Greece will continue because they only have 2 options: cut as hard and deep as is demanded for them to get their bailout money or leave the Euro. Same then, same now. So the politics doesnt influence the financials and its the consequences of those financial outcomes that determines the impact outside of Greece.
Sorry, option 3: return of Greek military rule. All bets are off then.
If you want to be so binary about things fair enough, you are quite right in your analysis of the two possible outcomes. I've never disagreed with you over that. Where you are wrong is that the election has changed the direction of the game. There will be a different result; Greece leaving the Euro.
Even twelve months ago most folk would have assumed the coalition would be maintained, now it's all changed.
- Before election: Pasok/ND = More cuts, more bailout funds, keep on right side of Europe/ECB, stay in the Euro.
- After election: Trots = No more cuts, two fingers to the banks/EU/ECB... but stay in the Euro
If the Greeks had voted to keep the Pasok/ND coalition then there would have been no question at all that the first option would apply, the EUdiots would still be carrying on as per last week/month/year, as would the banks. Just ask Baroso or Rumpy if they'd rather ND had won enough seats to form a workable Govt.
In the unlikely event the Trots manage to form a cohesive Govt, they WILL NOT bail out the banks or impose more cuts and if that means leaving the Euro then I suspect they'll feel it's the lesser of two evils. And that is a step change to the previous state of affairs, and all due to the election.
If so, what would be the exit route?
Would it be a well defined exchange/trade or would there be a general call for everyone to start using dollars as a show of 'disobedience' ?
Great thread, I find it really interesting, thanks!
Gary11 said:
coyft said:
I don't really think the election has changed anything. The simple fact is that Greece can not compete with Germany, it suited both Government's political ambitions to maintain the charade. That charade has now come to an end and we come back to the fundamentals, Greece can not compete with Germany. It's not in the same league, it's a bit like football, they got promoted to the premier league, now they need to go back to division one. Unfortunately for Greece there is no parachute payment to soften the blow.
I dont agree here, I dont belive they wanted to compete with Germany but just wanted her as a vehicle to extricate cash from...what do I know.coyft said:
Whatever the motives, it suited the politicians of the day. Reality has now caught up with, Greece can't compete and the German's won't subsidise them.
Reality hasn't caught up with the talking heads on Newsnight. Mandelson would bet on Greece still in the EZ in a year's time... a German reckons growth comes from structural reforms... a Greek won't admit or deny anything. 
bosscerbera said:
Reality hasn't caught up with the talking heads on Newsnight. Mandelson would bet on Greece still in the EZ in a year's time... a German reckons growth comes from structural reforms... a Greek won't admit or deny anything.
I saw that too. And the Greek party member who just wants to still get the money and change the terms (no interest payment). But he still wants to remain in the Euro.......There are far too many people (both voters and politicians) living in cloud cuckoo land and with the grasp of economics.
The question for me is whole long before wholesale panic grips the markets and money starts exiting Greek bonds and those of the remainder of Europe for that matter.
Mandelson is a good example of why most politicians should be killed at birth (sorry, I know there are some good ones but Mandelson really just does my head in to the point of wanting to see him suffering the same fate as the monkey in Hartlepool).
GBB said:
bosscerbera said:
Reality hasn't caught up with the talking heads on Newsnight. Mandelson would bet on Greece still in the EZ in a year's time... a German reckons growth comes from structural reforms... a Greek won't admit or deny anything.
I saw that too. And the Greek party member who just wants to still get the money and change the terms (no interest payment). But he still wants to remain in the Euro.......There are far too many people (both voters and politicians) living in cloud cuckoo land and with the grasp of economics.
The question for me is whole long before wholesale panic grips the markets and money starts exiting Greek bonds and those of the remainder of Europe for that matter.
Mandelson is a good example of why most politicians should be killed at birth (sorry, I know there are some good ones but Mandelson really just does my head in to the point of wanting to see him suffering the same fate as the monkey in Hartlepool).
This absolute straight faced dishonesty of EU Politicians is neither good for democracy, nor for the resolution of the problems, nor for the EU itself which is steadily bleeding Billions of Euros into the madness of sustaining the HBAT's. Clearly this is complete nonsense and cannot go on for 12 months, although the Politicians are very hopeful, that they can spin it out, because they would welcome the opportunity, to line their pockets, for another 12 months.
The total refusal of all the politicians in the EU, Germany, France, Greece, Spain and so on to admit their mistakes, and recognise the inevitability of the HBAT's having no alternative to defaulting, is absolutely appalling. Not one Politician in the EU or the HBAT's is admitting the truth and tragically, until someone recognises that the HBAT's will default and must be allowed to default, in a controlled and damage limiting way, there can be no reality in these protestations of permanent financial stability within the EU. Because there is no stability in this nonsense. There cannot be stability in a crumbling structure.
It is difficult to believe that such barefaced dishonesty is being repeated daily all over Europe. But is is, visibly, a fact.
Even with Greece changing the politicians mandate in the way it has and Sarkozy being history, individuals like Mandelson can happily state that Greece will be within the Euro for another 12 months with a straight face. Doubtless, he could sleep, comfortably, in a corkscrew.
It is an appalling indictment of the depths to which modern politics have sunk. Lie, lie again, make up a few more lies, lie some more and keep on lying, some fool will believe you, is the modern political approach.
I would expect this to be over, in terms of the first actual defaults within weeks. I said before that there were simply too many cracks in the EU strategy for this to be continued. Since when, the Greeks have overwhelmingly voted for the removal of austerity which must mean default.
In addition and perhaps even more seriously, Sarkozy, that doyen of all bent European politicians, has been ousted, thankfully, by the French. But Mandelson and the EU politicians, happily present the case for this nonsense being continued. Knowing this to be untrue.
Still, all the EU politicians extol the same pack of lies. Knowing, to a man, that it is a barefaced lie. Because it suits them.
Not for long, me thinks. Reality is dawning. Bailing out already insolvent entities will not address the insolvency at all. In fact. it makes it worse.
The total refusal of all the politicians in the EU, Germany, France, Greece, Spain and so on to admit their mistakes, and recognise the inevitability of the HBAT's having no alternative to defaulting, is absolutely appalling. Not one Politician in the EU or the HBAT's is admitting the truth and tragically, until someone recognises that the HBAT's will default and must be allowed to default, in a controlled and damage limiting way, there can be no reality in these protestations of permanent financial stability within the EU. Because there is no stability in this nonsense. There cannot be stability in a crumbling structure.
It is difficult to believe that such barefaced dishonesty is being repeated daily all over Europe. But is is, visibly, a fact.
Even with Greece changing the politicians mandate in the way it has and Sarkozy being history, individuals like Mandelson can happily state that Greece will be within the Euro for another 12 months with a straight face. Doubtless, he could sleep, comfortably, in a corkscrew.
It is an appalling indictment of the depths to which modern politics have sunk. Lie, lie again, make up a few more lies, lie some more and keep on lying, some fool will believe you, is the modern political approach.
I would expect this to be over, in terms of the first actual defaults within weeks. I said before that there were simply too many cracks in the EU strategy for this to be continued. Since when, the Greeks have overwhelmingly voted for the removal of austerity which must mean default.
In addition and perhaps even more seriously, Sarkozy, that doyen of all bent European politicians, has been ousted, thankfully, by the French. But Mandelson and the EU politicians, happily present the case for this nonsense being continued. Knowing this to be untrue.
Still, all the EU politicians extol the same pack of lies. Knowing, to a man, that it is a barefaced lie. Because it suits them.
Not for long, me thinks. Reality is dawning. Bailing out already insolvent entities will not address the insolvency at all. In fact. it makes it worse.
Back to the matters of concern mow being expressed, at the reality of the consequences of the Greek and French elections.
The Beeb has published an interesting article from a leading Greek Economist Professor Dimitri Mardas which spells out the pressure on the Greek politicians to renegotiate the EU deal. Some hope!
See http://www.bbc.co.uk/news/world-europe-17993894
And a pretty damning report by Stephanie Flanders about the probability of a Greek default see:
http://www.bbc.co.uk/news/business-17999206
If the Greeks are allowed to renegotiate their deal, the queue by the other HBAT's to renegotiate their deals, will suddenly lengthen massively. They will all want to join!
In fact the only way to hold the HBAT's within the Euro, in such a way as to allow the HBAT's to recover their prosperity, and still remain within the Euro, would be to pay all their unrecovered costs to balance their budgets, by direct subsidy from the EU.
Not even Sarkozy was that mad. Default here we come!
The Beeb has published an interesting article from a leading Greek Economist Professor Dimitri Mardas which spells out the pressure on the Greek politicians to renegotiate the EU deal. Some hope!
See http://www.bbc.co.uk/news/world-europe-17993894
And a pretty damning report by Stephanie Flanders about the probability of a Greek default see:
http://www.bbc.co.uk/news/business-17999206
If the Greeks are allowed to renegotiate their deal, the queue by the other HBAT's to renegotiate their deals, will suddenly lengthen massively. They will all want to join!
In fact the only way to hold the HBAT's within the Euro, in such a way as to allow the HBAT's to recover their prosperity, and still remain within the Euro, would be to pay all their unrecovered costs to balance their budgets, by direct subsidy from the EU.
Not even Sarkozy was that mad. Default here we come!
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