Is the end nigh for the Euro? [vol. 3]
Discussion
Interesting development for the EU to resolve. I anticipate an ineffective fudge leading to a papering over once again of the reality of the problems the failing Sovereign states all have. They are hopelessly insolvent and cannot afford to be held within the Euro.
The EU is not in a position to address any of the serious economic problems facing each of the failing states. All the EU is trying to do is keep the ball rolling and not admit the truth. In order to do that massive QE in Euros is going to be injected into the EU economy month by month for years with absolutely no guarantee that this will produce any improvement within any of the EU states and certainly not in any of the insolvent failing States locked within the Euro.
The EA may keep the ball rolling a little longer. But reality must be beginning to dawn on the financial markets around the world. Whatever nonsense fix the EU proposes for Greece every one of the failing states is going to need similar assistance year on year as time goes by. This is becoming a visibly unworkable currency union with members locked within the union who simply cannot afford to remain within the union. There can be no lasting cures in such an unbalanced union and this will end with withdrawal by the failing states. This is not going to get better, it is getting steadily worse and the truth is that the EU solution is no real solution at all.
It will be interesting to see how the EU attempts to hide this latest problem. Hiding the truth has become a real art within the EU. One thing is certain nothing the EU proposes will actually admit there is a real problem and attempt to address the problem. The EU will continue to deny that there is a problem and print massive amounts of QE money to prove there is problems. You could not make it up!
The EU is not in a position to address any of the serious economic problems facing each of the failing states. All the EU is trying to do is keep the ball rolling and not admit the truth. In order to do that massive QE in Euros is going to be injected into the EU economy month by month for years with absolutely no guarantee that this will produce any improvement within any of the EU states and certainly not in any of the insolvent failing States locked within the Euro.
The EA may keep the ball rolling a little longer. But reality must be beginning to dawn on the financial markets around the world. Whatever nonsense fix the EU proposes for Greece every one of the failing states is going to need similar assistance year on year as time goes by. This is becoming a visibly unworkable currency union with members locked within the union who simply cannot afford to remain within the union. There can be no lasting cures in such an unbalanced union and this will end with withdrawal by the failing states. This is not going to get better, it is getting steadily worse and the truth is that the EU solution is no real solution at all.
It will be interesting to see how the EU attempts to hide this latest problem. Hiding the truth has become a real art within the EU. One thing is certain nothing the EU proposes will actually admit there is a real problem and attempt to address the problem. The EU will continue to deny that there is a problem and print massive amounts of QE money to prove there is problems. You could not make it up!
NicD said:
hmmmm. I doubt that cockroaches (ultimate survivors) have any concept of those but it seems absolute that as a society progresses, it starts to treat itself better,.
In future years, China should become less autocratic.
They love a bit of autocracy, like the Russians. Any democratic moves by China will be slight by western standards, at least in our lifetimes. They have learnt from Tiananmen, it won't happen again.In future years, China should become less autocratic.
Maybe not our kids, but a lot of our grandkids will be working for Chinese-owned companies and paying rent/mortgages to Chinese landlords/banks.
All IMHO, of course.
I've been a believer for a long while that in these current unchartered times that the markets won't be the ones that destroy the whole European on going experiment/Ponzi as indeed they are integrally part of it.
It will be the people of an individual member state that finally are driven to a point of such disppear that an acting party are totally elected on a mandate of them shoving the debt in full and dropping the Euro. Unfortunately to get to that desperate dangerous position things would have to get even more worse in places like Greece/Portugal. Then the whole stack will fall.
My guess is this time Alexis will pacify his electors with supposed deal with the troika that retains the euro but with a new sub cash scam that addresses nothing of the fundamental problems that actually contribute to real growth and competitiveness that creates jobs and wealth. His term will come and go and with no measurable significant changes to 36% Greek poverty base.
And so on and so forth.................
It will be the people of an individual member state that finally are driven to a point of such disppear that an acting party are totally elected on a mandate of them shoving the debt in full and dropping the Euro. Unfortunately to get to that desperate dangerous position things would have to get even more worse in places like Greece/Portugal. Then the whole stack will fall.
My guess is this time Alexis will pacify his electors with supposed deal with the troika that retains the euro but with a new sub cash scam that addresses nothing of the fundamental problems that actually contribute to real growth and competitiveness that creates jobs and wealth. His term will come and go and with no measurable significant changes to 36% Greek poverty base.
And so on and so forth.................
Steffan said:
There can be no lasting cures in such an unbalanced union and this will end with withdrawal by the failing states.
What would happen if the not failing and not quite failing States decided to withdraw?I'm not sure that the EU rules would allow that by any means that the legal people could come up with but let's say that the Northern entities get to the point where they say "Sod it" and just withdraw support or come up with some other way of stepping out of the Eurozone in full or in part?
Edited by LongQ on Monday 26th January 10:35
Steffan said:
Interesting development for the EU to resolve. I anticipate an ineffective fudge leading to a papering over once again of the reality of the problems the failing Sovereign states all have. They are hopelessly insolvent and cannot afford to be held within the Euro.
The EU is not in a position to address any of the serious economic problems facing each of the failing states. All the EU is trying to do is keep the ball rolling and not admit the truth. In order to do that massive QE in Euros is going to be injected into the EU economy month by month for years with absolutely no guarantee that this will produce any improvement within any of the EU states and certainly not in any of the insolvent failing States locked within the Euro.
The EA may keep the ball rolling a little longer. But reality must be beginning to dawn on the financial markets around the world. Whatever nonsense fix the EU proposes for Greece every one of the failing states is going to need similar assistance year on year as time goes by. This is becoming a visibly unworkable currency union with members locked within the union who simply cannot afford to remain within the union. There can be no lasting cures in such an unbalanced union and this will end with withdrawal by the failing states. This is not going to get better, it is getting steadily worse and the truth is that the EU solution is no real solution at all.
It will be interesting to see how the EU attempts to hide this latest problem. Hiding the truth has become a real art within the EU. One thing is certain nothing the EU proposes will actually admit there is a real problem and attempt to address the problem. The EU will continue to deny that there is a problem and print massive amounts of QE money to prove there is problems. You could not make it up!
Hello Steffan The EU is not in a position to address any of the serious economic problems facing each of the failing states. All the EU is trying to do is keep the ball rolling and not admit the truth. In order to do that massive QE in Euros is going to be injected into the EU economy month by month for years with absolutely no guarantee that this will produce any improvement within any of the EU states and certainly not in any of the insolvent failing States locked within the Euro.
The EA may keep the ball rolling a little longer. But reality must be beginning to dawn on the financial markets around the world. Whatever nonsense fix the EU proposes for Greece every one of the failing states is going to need similar assistance year on year as time goes by. This is becoming a visibly unworkable currency union with members locked within the union who simply cannot afford to remain within the union. There can be no lasting cures in such an unbalanced union and this will end with withdrawal by the failing states. This is not going to get better, it is getting steadily worse and the truth is that the EU solution is no real solution at all.
It will be interesting to see how the EU attempts to hide this latest problem. Hiding the truth has become a real art within the EU. One thing is certain nothing the EU proposes will actually admit there is a real problem and attempt to address the problem. The EU will continue to deny that there is a problem and print massive amounts of QE money to prove there is problems. You could not make it up!
You seem to be saying above what I've been repeating here from the beginning: that as the "people in charge" make up the rules, they can change these rules whenever they like to suit their agenda and thus keep the Euro going in an artificial way.
Let's not forget though that all financial systems are artificial anyway.
Considering this perpetual "papering over" as you nicely call it, are you saying the End may not be quite so nigh after all? (sincerely not a silly challenge to you, just interested).
For the Greeks, let us not forget the rousing speech that Hollande gave on his presidential win...
http://www.bbc.com/news/world-europe-17978820
...and the state of the country and how much he is hated by the French (ETA and me but then I always did) now.
Edited by Driller on Monday 26th January 07:43
So here is the problem for the EU now.
Last week Draghi announced 1.1 Trillion in QE, new money in bonds.
Are the EU seriously going to die in a ditch over Greek terms to renegotiate, defer or write off the measly 30bn that was loaned to them in 2010 and 2011?
I take the argument that if the EU cave in to Athens now, then Ireland, Portugal, Spain and Italy will wonder why bother.
However, what was the point of QE if not to right the financial wrongs of economic contraction caused by a lack of money supply ? Greece remains 25% smaller economically than in 2008.
Gargamel said:
So here is the problem for the EU now.
Last week Draghi announced 1.1 Trillion in QE, new money in bonds.
Are the EU seriously going to die in a ditch over Greek terms to renegotiate, defer or write off the measly 30bn that was loaned to them in 2010 and 2011?
I take the argument that if the EU cave in to Athens now, then Ireland, Portugal, Spain and Italy will wonder why bother.
However, what was the point of QE if not to right the financial wrongs of economic contraction caused by a lack of money supply ? Greece remains 25% smaller economically than in 2008.
Caving in to the notion that everyone's lifestyle can be fantastic providing we print enough money to go round sets a rather dangerous precedent. Borrow to fund an unsustainable lifestyle, print some money to pay off the debt then borrow some more, sounds like a good plan to many. Makes a refreshing change from the 'tax the rich, they can afford it' plan.Last week Draghi announced 1.1 Trillion in QE, new money in bonds.
Are the EU seriously going to die in a ditch over Greek terms to renegotiate, defer or write off the measly 30bn that was loaned to them in 2010 and 2011?
I take the argument that if the EU cave in to Athens now, then Ireland, Portugal, Spain and Italy will wonder why bother.
However, what was the point of QE if not to right the financial wrongs of economic contraction caused by a lack of money supply ? Greece remains 25% smaller economically than in 2008.
RYH64E said:
Caving in to the notion that everyone's lifestyle can be fantastic providing we print enough money to go round sets a rather dangerous precedent. Borrow to fund an unsustainable lifestyle, print some money to pay off the debt then borrow some more, sounds like a good plan to many. Makes a refreshing change from the 'tax the rich, they can afford it' plan.
I agree, but logically the ECB and EU cannot have it both ways. How can they point at Greece and say "live within your means, you borrowed it, now pay it back" Whilst meanwhile over here they are lending out 1,100,000,000,000 Euro's in virtually free moneyMakes no sense, and I am sure the point won't be lost on Mr Tsipiras.
RYH64E said:
Gargamel said:
So here is the problem for the EU now.
Last week Draghi announced 1.1 Trillion in QE, new money in bonds.
Are the EU seriously going to die in a ditch over Greek terms to renegotiate, defer or write off the measly 30bn that was loaned to them in 2010 and 2011?
I take the argument that if the EU cave in to Athens now, then Ireland, Portugal, Spain and Italy will wonder why bother.
However, what was the point of QE if not to right the financial wrongs of economic contraction caused by a lack of money supply ? Greece remains 25% smaller economically than in 2008.
Caving in to the notion that everyone's lifestyle can be fantastic providing we print enough money to go round sets a rather dangerous precedent. Borrow to fund an unsustainable lifestyle, print some money to pay off the debt then borrow some more, sounds like a good plan to many. Makes a refreshing change from the 'tax the rich, they can afford it' plan.Last week Draghi announced 1.1 Trillion in QE, new money in bonds.
Are the EU seriously going to die in a ditch over Greek terms to renegotiate, defer or write off the measly 30bn that was loaned to them in 2010 and 2011?
I take the argument that if the EU cave in to Athens now, then Ireland, Portugal, Spain and Italy will wonder why bother.
However, what was the point of QE if not to right the financial wrongs of economic contraction caused by a lack of money supply ? Greece remains 25% smaller economically than in 2008.
turbobloke said:
Has an asset grab been ruled out by Syriza?
No, it's been rules out by the huge, record outflow of capital from Greek banks last week. Apart from turning over matresses in the hope of hitting those unable or unwilling to actually get their funds out of the country, if not the bank, they don't have an opportunity to do a Cyprus.Digga said:
turbobloke said:
Has an asset grab been ruled out by Syriza?
No, it's been rules out by the huge, record outflow of capital from Greek banks last week. Apart from turning over matresses in the hope of hitting those unable or unwilling to actually get their funds out of the country, if not the bank, they don't have an opportunity to do a Cyprus.They're clearly planning to go to the mattresses
ETA the December outflow estimate is 3 billion euros, the January tax collapse so far is estimated to be 1.5 billion euros.
turbobloke said:
Digga said:
turbobloke said:
Has an asset grab been ruled out by Syriza?
No, it's been rules out by the huge, record outflow of capital from Greek banks last week. Apart from turning over matresses in the hope of hitting those unable or unwilling to actually get their funds out of the country, if not the bank, they don't have an opportunity to do a Cyprus.They're clearly planning to go to the mattresses
ETA the December outflow estimate is 3 billion euros, the January tax collapse so far is estimated to be 1.5 billion euros.
Yes, 8 bloody billion in a week! Honestly, why would anyone risk keeping any money at all in any of their insolvent banks? I remain convinced that Greece will be booted out of the Euro as an example to the other of what Steffan terms "failed states". You can see this in the cold dead eyes of Herr Schauble. So any deposits in Greek banks will instantly be turned to Drachma overnight anyway, and that's before the commies seize it via a "bail in".
IMO any wealth taxes are likely to be levied on other assets; property, land, shipping, businesses (if there are any viable ones left). I guess we will shortly find out if the old Monty Python line about "the workers control the means of production" is true or false.
Andy Zarse said:
IMO any wealth taxes are likely to be levied on other assets; property, land, shipping, businesses (if there are any viable ones left). I guess we will shortly find out if the old Monty Python line about "the workers control the means of production" is true or false.
Indeed. Earlier I spoke of an asset grab, clearly not all assets can be spirited away and Syriza may regard those that remain as fair game. How it would work in practice is another matter.
turbobloke said:
Indeed.
Earlier I spoke of an asset grab, clearly not all assets can be spirited away and Syriza may regard those that remain as fair game. How it would work in practice is another matter.
There is a very real risk that many Greeks could follow their cash, effectively taxed into exile, gambling that it's better to start their lives again in a better economy.Earlier I spoke of an asset grab, clearly not all assets can be spirited away and Syriza may regard those that remain as fair game. How it would work in practice is another matter.
Whatever way the wind blows this is utterly fascinating.
Much like the potential of the Scottish referendum this could result in some particularly interesting geopolitiking - the fallout could be barely noticeable, catastrophic or anywhere in between.
I suspect that Greece will indeed face a battering over the long term through horrific brain-drain and totally inept political leaders who have been thrust into a situation they're singularly ill-equipped to deal with.
Much like the potential of the Scottish referendum this could result in some particularly interesting geopolitiking - the fallout could be barely noticeable, catastrophic or anywhere in between.
I suspect that Greece will indeed face a battering over the long term through horrific brain-drain and totally inept political leaders who have been thrust into a situation they're singularly ill-equipped to deal with.
Digga said:
turbobloke said:
Indeed.
Earlier I spoke of an asset grab, clearly not all assets can be spirited away and Syriza may regard those that remain as fair game. How it would work in practice is another matter.
There is a very real risk that many Greeks could follow their cash, effectively taxed into exile, gambling that it's better to start their lives again in a better economy.Earlier I spoke of an asset grab, clearly not all assets can be spirited away and Syriza may regard those that remain as fair game. How it would work in practice is another matter.
Driller suggests that the EU can rewrite the rules as they wsh and he does have a point.
However quite how the EU can rewrite the rules to alleviate the problems of Greece in the full glare of publicity and not immediately effectively call upon the other failing states to form a queue accessing the same subsidies is a real conundrum . 
The extent of the billions of Euros being thrown about by the EU and the absolute abcsence of any guarantee that this largesse will actually really benefit any of the failing states is deeply serious economic gambling. I do not think the gamble will work. The failing states have not recovered, are not recovering and will not recover. The EU may push this along for a bit by wasting billions of Euros in an ill conceived gamble.
But the truth is that these failing states cannot recover whilst held within a wholly unaffordable currency dominated by Germany. The great EU experiment is failing and faiiing visibly. There will be no recovery in the EU.
Steffan said:
The extent of the billions of Euros being thrown about by the EU and the absolute abcsence of any guarantee that this largesse will actually really benefit any of the failing states is deeply serious economic gambling. I do not think the gamble will work. The failing states have not recovered, are not recovering and will not recover. The EU may push this along for a bit by wasting billions of Euros in an ill conceived gamble.
Interestingly, I also understand that 77% of the assets* held by the European EFSF bail-out vehicle is in the form of Greek debt
- an interesting use of the word "asset", which in this case means worthless IOUs signed by previous Greek politicians who would do or say almost anything (except actually reform their country) to get the next multi-billion bail-out fix.
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