Is the end nigh for the Euro? [vol. 3]
Discussion
Walford said:
Once one country leaves, the whole lot will impload
A Smaller country or even countries could leave without implosion of the euro IMHO For Italy, France and Spain I could agree with you, though that is a lot of IFS,
Then you must consider Germany, the only country to leave and bring down the euro with any certainty, still it leaves us with the GIFS, a short but animated end to the euro?
Brite spark said:
Walford said:
Once one country leaves, the whole lot will impload
A Smaller country or even countries could leave without implosion of the euro IMHO For Italy, France and Spain I could agree with you, though that is a lot of IFS,
Then you must consider Germany, the only country to leave and bring down the euro with any certainty, still it leaves us with the GIFS, a short but animated end to the euro?
Walford said:
But if say Greece or Portugal left and started there own currency back up, they may start to recover, since they are no longer over valued, them the sh/t will hit the fan
I've got customers in Greece, I'll accept payment from them in GBP, USD or EUR, I'd no more accept Drachma than I would Monopoly money and I rather suspect every other supplier is going to want exactly the same terms. If they revert to their own currency to make exports cheap how are they going to get hard currency to pay for imports?RYH64E said:
I've got customers in Greece, I'll accept payment from them in GBP, USD or EUR, I'd no more accept Drachma than I would Monopoly money and I rather suspect every other supplier is going to want exactly the same terms. If they revert to their own currency to make exports cheap how are they going to get hard currency to pay for imports?
Standard IMF treatment I would have thought. If Greece escapes then it will be in the context of an IMF bailout/takeover. That would entail the IMF supplying the cash initially (several tranches I would guess) while Greece found its feet again.s2art said:
RYH64E said:
I've got customers in Greece, I'll accept payment from them in GBP, USD or EUR, I'd no more accept Drachma than I would Monopoly money and I rather suspect every other supplier is going to want exactly the same terms. If they revert to their own currency to make exports cheap how are they going to get hard currency to pay for imports?
Standard IMF treatment I would have thought. If Greece escapes then it will be in the context of an IMF bailout/takeover. That would entail the IMF supplying the cash initially (several tranches I would guess) while Greece found its feet again.Predicting the form that a default of a major entity within the EU may take is a very, very, difficult task because there have been no recent similar events for many years in the Western World. If Greece defaulted it might be possible for the EU to fudge loans to Greece, or create some form of fiscal parachute to enable a form of controlled collapse and a restructuring of the Greek economy with some form of currency replacing the Euro. As Bright spark says with a small economy like Greece there might be a chance that an organised rescinding of EU membership could be brokered and not have the roll on effect as a lack of confidence in the markets and has serious consequences for the borrowing of the remaining EU membership. Equally as RYH64E no businessman will undertake accepting payment in anything other than a known security lightly, which has to be reasonable and fair method of trade.
But this simply cannot work for likes of Italy and the other large EU entities. Too much serious debt and if Italy falls France is toast because of the exposure of the French banks to Italian debt. Which means that if Italy falls then a real catastrophe economically is precipitated. And as many pundits are warning France and Italy are both teetering on the edge of recession and indeed from my observations personally in Europe so are several other substantial states.
The problem really is about confidence being maintained in the money markets. The domino effect whereby the collapse of one entity causes immediate concern about other entities associated with the collapsing entity to be damaged and overall confidence can very rapidly crumble and a full scale collapse can begin. Banking being the prime example.
I do not wish to see ant real trauma in any part of Europe. But nor do I accept that sovereign states teetering on the edge of collapsing and already visibly in recession, can be sustained by central banks printing unsupported money which is not underpinned by growth or wealth creation within the failing sovereign states. In consequence I have always thought that the EU philosophy of "throw some more plastic money at the problem cannot be sustained, since I first realised how fundamentally dishonesty the the whole EU failing state subsidy process had become over the last few years.
In 2006 I realised all was not at all well within the failing EU states. Travelling around Europe and seeing for myself the nonsense's that were being perpetrated. I began to have very serious concerns as to whether buying a property in Europe was a good idea. Since then all the EU has done is to raise a gigantic Ponzi scheme and pretend all is well.
It is not. The Ponzi scheme is going to become apparent and there are going to be the inevitable collapses that must come. There is no permanence in the EU position and there never has been. The players are just ensuring that their nests are well and truly safe and well lined. It may take some more time for reality to become too visible and the farce may continue. But this nonsense cannot be sustained.
Edited by dazren on Monday 18th August 22:41
RYH64E said:
I've got customers in Greece, I'll accept payment from them in GBP, USD or EUR, I'd no more accept Drachma than I would Monopoly money and I rather suspect every other supplier is going to want exactly the same terms. If they revert to their own currency to make exports cheap how are they going to get hard currency to pay for imports?
They will still get supplied with stuff by someone, they'll either transfer their new flat currency for one someone will take or end up paying a lot more of their currency direct to a supplier who then holds it or quickly exchanges it to a preferred currency. As long as an exit from the euro is done with good will rather than a hostile exit it may not be Armageddon for the country involved,other countries have defaulted before, similar thing IMHO.
RYH64E said:
I've got customers in Greece, I'll accept payment from them in GBP, USD or EUR, I'd no more accept Drachma than I would Monopoly money and I rather suspect every other supplier is going to want exactly the same terms. If they revert to their own currency to make exports cheap how are they going to get hard currency to pay for imports?
It's called the international banking system...Millions of people will be desperately trying to get hold of new Drachmas to spend on their Greek holidays which will, all of a sudden, be much better value after default...
Mermaid said:
I've not posted much on NP&E for quite some time. Maybe because I have an idea that I can't shake and that I find just too strange.It goes back to the notion that if there isn't growth then the system does not work. Because without expansion the debt on the fiat currency interest can't be paid.
So an economy with low inflation, achieved by money printy printy is stronger (wealthier) than one that attempts to survive on sound money and no printy printy.
This seems fundamentally wrong (to me). My only reasoning as to why is that when there is growth, people will posess money (magic numbers) instead of stuff (substance, energy, technology, land etc). The reason being that the magic numbers grow.
I assume the growth is in a pyramid shape !
Mermaid said:
As ever Mermaid absolutely on the button.What will Mr Draghi decide to do himself? Unless he creates significant artificial stimulation to the falling economies of Europe, now further affected by the direct consequences of the Russian sanctions to the likes of Germany, the key economy in this situation, there is a serious danger of the few remaining stable economies in the EU suffering recession. Then what?
To my mind as a mere observer, although having some direct knowledge from observations in Italy during my lengthy stays, there is every indication that the reality of the failing economies in Europe, is that they are already in serious difficulty. They will only find survival more difficult as serious recession affects the stronger economies of the EU. Nothing that the EU has tried to do, as yet, is going to reinflate the failing economies of the EU. In fact the " solution " is forcing the failing economies to fail even more comprehensively. The truth is, as is now very apparent, from this total lack of any real success in stimulating real growth within the failing economies within this EU sham, this "solution" is nothing of the sort and that is the fundamental problem that Draghi's cannot address.
I have suggested more than once upon this thread, that forcing the failing economies to raise taxes and reduce public borrowing cannot possibly assist these economies to recover. Recessions cannot be corrected by cutting economies. I still believe that this the reality of economics and therefore I cannot see any recovery from this supposed "solution". So what happens now?
What will the EU leaders do next? Continue to mislead the public and beaver away at feathering their own personal nests and getting as much from the EU gravy train as possible IMO. I regret to say that does seem to me to be the mantra of modern politics, Tony Blair, Gordon Brown, the Kinnocks, et al being prime eamples. It seems inevitable to me that this non solution is never going to work. The politicians look after themselves, their families and their friends and colleagues. Sadly that has become the way in modern politics. God help the taxpayers in all of this.
How long can the EU keep this going?
I suspect we are already well down the process of finding out.
Edited by Steffan on Monday 18th August 10:52
Perhaps Steffan we should all follow the EU's and UN example of how to attracting, retain and reward the best people.
Simply allow them to pay no taxes. Maybe we should half the tax rate simultaneously across all of the Eurozone and the UK, and allow the governments and ECB to simply print the money to replace the lost income.
Certainly would give demand pull a healthy kick, and the spend could actually spread out beyond the hoteliers and restaurateurs of Brussels and Strasbourg...
Of course would never happen, but I find the idea of handing more money to banks, who really can only use it to meet capital retention requirements rather odd and unappealing.
Steffan said:
What will Mr Draghi decide to do himself?
Err, only what Angela and Wolfgang let him do....Anyway Steffan, I thought you might be interested in this superb in-depth analysis on Italy.
http://fistfulofeuros.net/afoe/the-italian-runaway...
Unless you've fifteen minutes to spare, people might want to skip the first third and ignore all the technical graphs (though personally I find them enlightening). Having said that, there's a graph illustrating the difference between the official Italians figures recording how many fellow countrymen are moving to the UK; as opposed to what the UK National Insurance foreign registration figures say. I know which I believe... and losing 44,000 motivated young people each year must only add to the worsening demographic crisis.
The thrust of the article is that basically there's almost no way out for Italy without default and/or bail out/in. And it also highlights how hopeless Renzi has been, all mouth and no trousers, I didn't know but apparently last week Renzi's was called to Mario Draghi's holiday home in the mountains for a secret meeting and giver a right old dressing down. Of course Italy being Italy the press were briefed
Anyway, I think Renzi's finally discovering that running a tourist trap like Florence is a piece of piss compared to running a bankrupt nation!I think we all knew Italy was FUBAR anyway, but it's nice to have it demonstrated using hard facts and figures. Talking of FUBAR, we haven't seen much of Ozzie and the other Pro-Euro frootloops on here since the much-vaunted EZ recovery went into reverse. My view is that it never really existed, and when I have a moment I'll scroll back and so we can see how what they said a year or so ago has worked out...
Edited by Andy Zarse on Monday 18th August 11:45
Gargamel said:
Perhaps Steffan we should all follow the EU's and UN example of how to attracting, retain and reward the best people.
Simply allow them to pay no taxes. Maybe we should half the tax rate simultaneously across all of the Eurozone and the UK, and allow the governments and ECB to simply print the money to replace the lost income.
Certainly would give demand pull a healthy kick, and the spend could actually spread out beyond the hoteliers and restaurateurs of Brussels and Strasbourg...
Of course would never happen, but I find the idea of handing more money to banks, who really can only use it to meet capital retention requirements rather odd and unappealing.
With you all the way on that one Gargamel. Simply allow them to pay no taxes. Maybe we should half the tax rate simultaneously across all of the Eurozone and the UK, and allow the governments and ECB to simply print the money to replace the lost income.
Certainly would give demand pull a healthy kick, and the spend could actually spread out beyond the hoteliers and restaurateurs of Brussels and Strasbourg...
Of course would never happen, but I find the idea of handing more money to banks, who really can only use it to meet capital retention requirements rather odd and unappealing.
iMO rewarding the hardworking achieves in life is good for everyone. I actually welcome the influx of Russian Oligarchs and all the other wealthy immigrants currently influxing into the UK because of the massive spin offs that emanate from the spending they then create within the UK. Crumbs from the rich mans tables has lined my pockets over the years and it undoubtedly validates the stability and security that this country offers in comparison with much of the world.
The high tax economies such as France are heading for disaster IMO. The more we can assist in getting the brains of the world to see this tiny island as the jewel it remains, set in the silver sea surrounding us, offerring inherently greater security than any other mainland EU state the happier I am!
Despite the efforts of most our politicians, who concern themselves solely with personal aggrandisement and staying on the gravy train that Politics has become, the UK still has something of the qualities that make me love being English by birth and choice.
Sadly it is apparent that most of the remaining qualities are being ended steadily. But for me personally England is still, beyond all other countries, the best place to live in the world. Mind you I do find Italy and the Italians great fun hence the lengthy absences. But my home is and remains solidly within England. And I use the term England advisedly!
Andy Zarse said:
Steffan said:
What will Mr Draghi decide to do himself?
Err, only what Angela and Wolfgang let him do....Anyway Steffan, I thought you might be interested in this superb in-depth analysis on Italy.
http://fistfulofeuros.net/afoe/the-italian-runaway...
Unless you've fifteen minutes to spare, people might want to skip the first third and ignore all the technical graphs (though personally I find them enlightening). Having said that, there's a graph illustrating the difference between the official Italians figures recording how many fellow countrymen are moving to the UK; as opposed to what the UK National Insurance foreign registration figures say. I know which I believe... and losing 44,000 motivated young people each year must only add to the worsening demographic crisis.
The thrust of the article is that basically there's almost no way out for Italy without default and/or bail out/in. And it also highlights how hopeless Renzi has been, all mouth and no trousers, I didn't know but apparently last week Renzi's was called to Mario Draghi's holiday home in the mountains for a secret meeting and giver a right old dressing down. Of course Italy being Italy the press were briefed
Anyway, I think Renzi's finally discovering that running a tourist trap like Florence is a piece of piss compared to running a bankrupt nation!I think we all knew Italy was FUBAR anyway, but it's nice to have it demonstrated using hard facts and figures. Talking of FUBAR, we haven't seen much of Ozzie and the other Pro-Euro frootloops on here since the much-vaunted EZ recovery went into reverse. My view is that it never really existed, and when I have a moment I'll scroll back and so we can see how what they said a year or so ago has worked out...
Edited by Andy Zarse on Monday 18th August 11:45
I do wonder how the EU can actually believe they are on the right track? Because it enables them to feather their own nests IMO. Long enough to make their fortunes from the gravy train and select their next position outside the EU and on the world stage I reget to say. This is only going to end one way because as that article from AZ clearly confirms this is getting steadily more and more serious and it's not going to get better. All the evidence to me suggests the personal gain of the EU leaders is the real underlying impetus. Nothing Draghi nor the EU are offering has benefitted the failing states in any way. Locked in aspic waiting for the inevitable collapse. Matter of ime.
Andy Zarse said:
It's called the international banking system...
Millions of people will be desperately trying to get hold of new Drachmas to spend on their Greek holidays which will, all of a sudden, be much better value after default...
Devaluing currency to make exports cheap makes imports damn expensive, especially with a new currency that's not likely to have much confidence. Anything priced in USD, such as fuel, is going to be extortionately expensive.Millions of people will be desperately trying to get hold of new Drachmas to spend on their Greek holidays which will, all of a sudden, be much better value after default...
RYH64E said:
Andy Zarse said:
It's called the international banking system...
Millions of people will be desperately trying to get hold of new Drachmas to spend on their Greek holidays which will, all of a sudden, be much better value after default...
Devaluing currency to make exports cheap makes imports damn expensive, especially with a new currency that's not likely to have much confidence. Anything priced in USD, such as fuel, is going to be extortionately expensive.Millions of people will be desperately trying to get hold of new Drachmas to spend on their Greek holidays which will, all of a sudden, be much better value after default...
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