I thought the only reason the market still buys is that if they stopped buying they'd all go bankrupt pretty much straight away due to their reserves being fractional. If you are being forced to eat poison, you'll eat the one that tastes nicest...

Wills2, personal attack, irrelevant

Looking at it from a least worst perspective, at least there are more degrees of freedom with GBP compared to the situation within EZ countries.

Whose Generation, I do accept that you have an alternative view based upon your assessment of the situation. You may well be right. The EU are lunatics chasing rainbows with OP money, and could keep the can rolling for some time.

Therefore it is possible that the Greeks could be persuaded or pressurised, with appropriate subsidies to remain within the Euro. The alternative is pretty bleak, which means the EU has got a strong hand. They are still very much in control.

If that happens, then the EU would be very well placed to persuade or pressurise the Spanish and Portuguese nations to not be the first out and remain, within the Euro. Again the prospect of default is very barren and unattractive and the EU are therefore in control.

However I think there is a real fly in that ointment.

If the EU, were the effective, competent, farsighted, well managed organisation, that they would like to be viewed as, I would agree, that this plan might have wings. In reality the EU are a dishonest, double dealing, two faced, set of moronic incompetents who have allowed a structure to be created to manage, or in fact not manage, the economies within the EU, by the EU. Sadly that is very apparent from the EU conduct in this mess.

If the EU had seen this problem coming, as others, including myself, have done for years, and taken effective action literally years ago, this mess could have been prevented, and stopped when the problem was still controllable. What the EU actually have done is to strut about denying the collapse, and procrastinate and refuse to deal with the problem, as it grew, year on year on year. I think it is that inherent weakness to face problems and manage the situation, that will be the undoing of the EU.

The credibility of the EU has been seriously damaged by this mess, which has been clearly visible throughout the Western world. The credibility of the EU has been steadily reduced with each successive failure and repair and further failure and repair in this HBAT's mess month`after month after month.

None of the EU protestations of success carry any conviction any more. Look at the Spanish PM saying what a fantastic victory for the EU, over his proposed banking fiddle. It lasted less than 48 hours.

I think the writing has been on the wall for some time for the EU and the Eurozone. I can see no real alternative to the HBAT's defaulting, despite all the frothy from the EU. But I could be wrong, and you could be right.

None of this is set in stone. My belief is that the EU has lost the credibility to resolve this. But they may kick the can down the road. In the end, I think the only solution lies in the insolvent defaulters facing the reality of their impecuniousness and leaving an unaffordable grouping. But this is only an opinion.

seems to me it is political vanity versus economic reality

I wouldn't be brave enough to place a bet on either in the short term

However, economic reality will ultimately win the war.

The question is how long it will take to play out.

Indeed. However, since you ask Wills2, the answer is yes. However my holdings are indirect as I trade equities not commodities. My clients have been overweight gold producers for the best part of the last decade.

The criticism of GB lies not only in the trade, which in my opinion doesn't stack up from a simple risk/reward analysis, but in the pig headed refusal to accept the advice of the Treasury and the complete abandonment of professional industry advice from the banking sector. The subsequent attempt to block information requests simply add fuel to the fire. Add a back drop of robust public finances at the time and one is left scratching one's head as to what logic GB was applying.

In addition, GB telegraphed his intention to the markets a year earlier which allowed a degree of front running to place further hurting the gold price.

As others have said, this sale could have been motivated by desire to show political support for the Euro, but GB sold 60% of our reserves, 40% of which went towards buying Euros. One has to question the motives, and many believe it had more to do with scratching the back of the Rothschilds et al.

Wherever you stand on the issue the degree of ineptitude displayed in execution and the rushed nature of the sales is very plain to see.

If you can stand this guys voice you may want to have listen;

http://www.youtube.com/watch?v=EzVhzoAqMhU&fea...

Anyway, back to the current debate... it's more interesting

Sorry Globs, I fear I may be missing your point. But mine was simply that if supporting the Euro was indeed his motivation he needn't of sold so much of the reserve.

Besides, the motivation is only one questionable aspect. I find the ineptitude surrounding execution the most pitiful part of the episode and hardly the sort of stewardship one expects of a chancellor.

Silly question, but why doesn't the ECB just print enough additional Euros to buy up the cheap Greek, Spanish and Italian debt?

This would have the effect of reducing EU debt yields and solving the crisis albeit at the expense of higher inflation.

What am I missing?

Shame, I've just invested in a wheelbarrow manufacturers.

I am wondering, like many on PH, and indeed in the financial world across Europe, what will happen with the Greek election.

In reality I think the die is cast in any event. The Greeks cannot function as a state with the current austerity measures in place. Either the Greeks find some way to negotiate with the EU, and Germany in particular, or they simply cannot remain within the Euro.

If the Greek vote empowers an anti Euro government then there will still, IMO be a period of negotiation with Greece by the EU. There has to be in all common sense. Greece will not just drop out. The consequences are far too serious.

If the Greek vote empowers a pro Euro government then there will inevitably, be a period of negotiation with Greece by the EU. Quite what that can achieve is open to question. I personally suspect not very much, but we cannot prejudge the discussions.

In reality therefore there will be a lull in the proceedings whatever happens. In fact I think there is a third option in that no Greek government may accept the challenge and a hung parliament may continue. I assume the process above would occur with a caretaker government acting in the Greek National interest. With the same lull, delaying decisions.

My best guess is that the EU will attempt to negotiate with, whichever Greek government arrives in power and that despite every effort, the talks will fail. Inevitably therefore the Greeks will face default.

Without seeking to lay blame the Creeks are massively overborrowed and unable to sustain either the debt or interest theron. In the absence of an economic fairy godmother, I think the Greeks can only default and return to their own currency.

I do hope the EU uses its considerable power to ensure as smooth a withdrawal as possible. The possible contagion and domino effects are frankly., horrendous for the EU and the Euro. The inevitable penury and impecunity facing Greece are both dreadful and dire. This requires the most careful management.

However there are possible alternative outcomes depending on the attitude and line taken by the EU. I think the EU is itself, stuck between a rock and a hard place. The EU simply cannot afford to bail out all the HBAT's and cannot therefore begin to make exceptions.

It will take a good month for the final decisions to be made I think. I think the Greeks will then be out of the EU, and huge pressure will be on the remaining HBAT's. Difficult times for is all. Dreadful times for the defaulters.