Is the end nigh for the Euro? [vol. 3]

[PRTVR]

LPP

Timmy40 said:

RYH64E said:

Timmy40 said:

LOL, they've been desperately trying to do that for the past 20 years and during that time Frankfurts position has if anything declined. Do you think the French and Germans have just sat there happily letting London dominate over Paris and Frankfurt? When I started in the City in 1995 there was still serious talk of those two as rivals ( even challengers ) to Londons position. No one seriosuly thinks that anymore.

Some still take it seriously, Cohn at Goldman Sachs for one. The EU is notoriously protective, I can think of no good reason why they wouldn't take the necessary steps to encourage global financial institutions to base their European headquarters in the EU rather than on a small island just off the coast of Europe.

And the reason you think they haven't tried and failed to do that for the past 2 decades without success is?

Small Island? It's a small Island with a comprable GDP to both France and Germany, neither of which I think would describe themselves as small or insiginificant.

Also in the financial market trust and stability stands for a lot, we have been doing the business for years, why would people trust a controlling system that raised the idea of the Tobin tax, yes I can see them leaving in their droves, they would love the risk of another tax.

[Andy Zarse]

Timmy40 said:

RYH64E said:

Timmy40 said:

LOL, they've been desperately trying to do that for the past 20 years and during that time Frankfurts position has if anything declined. Do you think the French and Germans have just sat there happily letting London dominate over Paris and Frankfurt? When I started in the City in 1995 there was still serious talk of those two as rivals ( even challengers ) to Londons position. No one seriosuly thinks that anymore.

Some still take it seriously, Cohn at Goldman Sachs for one. The EU is notoriously protective, I can think of no good reason why they wouldn't take the necessary steps to encourage global financial institutions to base their European headquarters in the EU rather than on a small island just off the coast of Europe.

And the reason you think they haven't tried and failed to do that for the past 2 decades without success is?

Small Island? It's a small Island with a comprable GDP to both France and Germany, neither of which I think would describe themselves as small or insiginificant.

Ooh yes, let's all do as Goldman Sachs says! They're never in it for themselves are they. Their sage advice has got nothing to do with their employees having to move to Paris or Frankfurt and pay much higher rates of tax than in the UK, good grief no, perish the thought...

And any Goldman are never wrong are they. They said the UK would be completely finished and brushed aside if we didn't join the mighty Euro, and oh wait etc.

[Digga]

Well it was helpful of those nice Goldman Sachs boys and girls to carry all that debt for poor old Greece when it joined the Euro. They're not all bad.

You only need see how many former Goldmanites end up working in politics, government and quasi-government to know which side they think their bread is buttered.

[Claudia Skies]

RYH64E said:

Some still take it seriously, Cohn at Goldman Sachs for one. The EU is notoriously protective, I can think of no good reason why they wouldn't take the necessary steps to encourage global financial institutions to base their European headquarters in the EU rather than on a small island just off the coast of Europe.

Totally agree.

EU competition law maintains a "level playing field" of fairness INSIDE the EU only. They could very easily implement a financial transaction tax which only affected institutions based outside the EU who were trying to do business inside the EU.

After all, that's how the inflow of Japanese cars was controlled and it's why there are Nissan/Toyota/Honda factories in UK.

[fido]

Digga said:

Well it was helpful of those nice Goldman Sachs boys and girls to carry all that debt for poor old Greece when it joined the Euro. They're not all bad.

Not sure why GS should get the blame - they were merely doing what their clients (Greece and the EU) wanted.
It's not always just a fool and his money, sometimes an advisor gets involved as well.

Edited by fido on Tuesday 27th January 16:49

[RYH64E]

Andy Zarse said:

Ooh yes, let's all do as Goldman Sachs says! They're never in it for themselves are they?

I'm in it for myself as well, unashamedly. The costs of EU membership are insignificant to me, especially when compared to the (very real imo) risks of exit.

[Andy Zarse]

RYH64E said:

Andy Zarse said:

Ooh yes, let's all do as Goldman Sachs says! They're never in it for themselves are they?

I'm in it for myself as well, unashamedly.

That explains why nobody else on here agrees with barely a word you write on this thread!

[Gargamel]

Claudia Skies said:

Totally agree.

EU competition law maintains a "level playing field" of fairness INSIDE the EU only. They could very easily implement a financial transaction tax which only affected institutions based outside the EU who were trying to do business inside the EU.

After all, that's how the inflow of Japanese cars was controlled and it's why there are Nissan/Toyota/Honda factories in UK.

It is in no ones interest to start a trade war, Germany needs the UK as a market, we need them as a supplier. There is nothing to be gained.

In any case if the second largest net contributor does pull out of Europe (which I still rate as highly unlikely) there will have to be a lot less European officials to do anything about starting a trade war

[RYH64E]

Andy Zarse said:

That explains why nobody else on here agrees with barely a word you write on this thread!

Goldman Sachs make plenty of money, I'm doing OK myself, it works for us (them more than me, obviously...). If the PH masses are doing better, good for them.

[turbobloke]

Gargamel said:

...there will have to be a lot less European officials to do anything...

What an excellent concept.

[Walford]

If Goldman Sachs move to Athens, we will be left with nothing

[Claudia Skies]

Gargamel said:

In any case if the second largest net contributor does pull out of Europe (which I still rate as highly unlikely) there will have to be a lot less European officials to do anything about starting a trade war

Which is a fair point, because it's not exactly as if the Greeks and Spaniards are going to make up the shortfall!

[Walford]

Claudia Skies said:

Gargamel said:

In any case if the second largest net contributor does pull out of Europe (which I still rate as highly unlikely) there will have to be a lot less European officials to do anything about starting a trade war

Which is a fair point, because it's not exactly as if the Greeks and Spaniards are going to make up the shortfall!

But they have enough cash reserves to last a few years

[Andy Zarse]

Walford said:

Claudia Skies said:

Gargamel said:

In any case if the second largest net contributor does pull out of Europe (which I still rate as highly unlikely) there will have to be a lot less European officials to do anything about starting a trade war

Which is a fair point, because it's not exactly as if the Greeks and Spaniards are going to make up the shortfall!

But they have enough cash reserves to last a few years

They do, but what they don't have is enough cash to shore up their bank's liquidity issues, many of which are brought about by the threat of a Syriza govt... It's a massive negative feedback loop, all centred around their Euro membership.

People on here have long argued that Greece should have defaulted and devalued years ago. This used to be the sensible remedial programme the IMF applied before it recently perverted its plans from those based on economics to ones based on French politics; run by, and for, the convenience of the EU and the ECB.

Edited by Andy Zarse on Tuesday 27th January 18:03

[Steffan]

Andy Zarse said:

Walford said:

Claudia Skies said:

Gargamel said:

In any case if the second largest net contributor does pull out of Europe (which I still rate as highly unlikely) there will have to be a lot less European officials to do anything about starting a trade war

Which is a fair point, because it's not exactly as if the Greeks and Spaniards are going to make up the shortfall!

But they have enough cash reserves to last a few years

They do, but what they don't have is enough cash to shore up their bank's liquidity issues, many of which are brought about by the threat of a Syriza govt... It's a massive negative feedback loop, all centred around their Euro membership.

People on here have long argued that Greece should have defaulted and devalued years ago. This used to be the sensible remedial programme the IMF applied before it recently perverted its plans from those based on economics to ones based on French politics; run by, and for, the convenience of the EU and the ECB.

Edited by Andy Zarse on Tuesday 27th January 18:03

The reactions in the meda to the statement by Syriza that no one really expects Greece to be able to repay its debts is an interesting mixture. Equally the decision by Syriza to make their first public engagement post winning the Greek elections to be staging a remembrance service for the fallen Greek partisans murdered by the Germans in the WWII. As various newspapers have confirmed their intentions are clear. Posturing very effectively.

In reality I think Syriza were also absolutely on the button with their comments that there us not an economist of any standing who seriously thinks Greece can actually afford to repay its debts. As a number of contributors on here have reminded us repeatedly that Greek debt is way beyond the levels the ever intended and simply far too large for a small economy like Greece to manage, service and repay.

The EU presumably will have to respond to the posturing of the Elected government of Greece. Rock and a very hard place seem to me to be the position that the EU now finds itself. The domino effect on the failing states must be the real concern for the EU. There will be runs on many banks within the EU if any of the failing states collapse and few of the banks within those states could withstand any such runs.

I cannot see how the EU are going to massage this lot away. The EU cannot be seen to favour Greece above the other struggling states within the EU and the early moves of Syriza suggest to me that they are playing this for all it's worth. It seems to me that Syriza in its early posturing is managing the problem rather effectively and enabling Syriza to take the moral highground by suggesting only fools think that Greece can afford to repay its debts. Achieving that when Greece is entirely responsible fir its own predicament and its own debts is something of an achievement. Not quite the path that the EU was hoping to follow. But where they are, I think.

How the EU are going to manage this latest problem, indeed whether the EU can manage this latest problem, remains to be seen. It's not looking good for the financial stability of the EU is it? I just cannot see how this charade can continue but there are a lot of powerful men seeking to prolong the charade. On we go then. For a while!

[Andy Zarse]

Steffan said:

In reality I think Syriza were also absolutely on the button with their comments that there us not an economist of any standing who seriously thinks Greece can actually afford to repay its debts. As a number of contributors on here have reminded us repeatedly that Greek debt is way beyond the levels the ever intended and simply far too large for a small economy like Greece to manage, service and repay.

Yes, completely agree.

I have asked Claudia several times to set out to us the mechanics of how Greece can repay its debts, oh and to show her working too. However, all she keeps saying (without any apparent self-awareness) is that the politics will make it so. To my mind this is like believing in the magic of Paul Daniels, that it is real and not a conjuring trick designed to deceive the gullible. Eventually someone will work out how the trick done and call your bluff.

As for her ever answering the question, I think we are going to have to be like Bob Marley, or indeed Germany, and Wait in Vain (no I don't wanna). I dare say he didn't but I bet he didn't get the girl either.

[Huntsman]

Andy Zarse said:

I have asked Claudia several times to set out to us the mechanics of how Greece can repay its debts, oh and to show her working too.

According to new on Aunty this morning, Greece won't default. I can't see how.

[arguti]

Andy Zarse said:

People on here have long argued that Greece should have defaulted and devalued years ago. This used to be the sensible remedial programme the IMF applied before it recently perverted its plans from those based on economics to ones based on French politics; run by, and for, the convenience of the EU and the ECB.

Edited by Andy Zarse on Tuesday 27th January 18:03

My reading of this issue - The Germans and French have done all in their power (along with and through the ECB, EC, etc)to prevent a technical default which would have triggered massive CDO/CDS payouts for which the German and especially the French banks were liable. All the money that has been "given" to Greece over the last 4-5 years has mostly gone towards reducing said banks exposure to default/Grexit and shifted the liability onto European taxpayers.

Whilst I am no Syriza supporter, I do think that their finance Minister has been quite articulate in some of his approach to all of this.

Interesting that a few years ago, whilst everybody was producing position papers and briefings on what would happen if Greece/PIGS defaulted or left the Eurozone, one of the banks turned it on its head and asked what would happen if Germany had to leave the Euro, their view IIRC was something like a 40% overnight increase in the value of the "new" DM.

On a personal note, I remain overweight in the Swiss Franc!

Edited by arguti on Wednesday 28th January 09:44

[fido]

Guam said:

Quick question, what would happen if the Greeks just start printing more Euros themselves and just stick two fingers up to the ECB and the paymasters?

Well replace the Euros with Drachmas and it's the same thing (obviously only the ECB can print Euros). As with the Brexit debate, the pro-EU camp always use the stick approach when debating "jobs will disappear" or "EU will levy taxes". With Greek default, the stick is "no one will lend to you" but in reality someone would lend to them (obviously at higher rates or with stringent terms) and perhaps this wight force the Greeks to sort themselves out ...

[Claudia Skies]

Guam said:

Quick question, what would happen if the Greeks just start printing more Euros themselves and just stick two fingers up to the ECB and the paymasters?

I don't think you've quite grasped the way it works....