Is the end nigh for the Euro? [vol. 3]
Discussion
Claudia Skies said:
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....Andy Zarse said:
Hey, before we get on to this subject, any chance of you answering the question about how Greece can afford to pay its debts. You know, showing us your calculations, statistics, assumptions, tax revenues, GDP and other tedious realities.
Greece can't pay it's debts, obviously. Default is the the sensible course, just as an individiual that can't pay his/her debts goes bankrupt and an insolvent company begins the liquidation process. The question is, what next for Greece? In the case of personal bankruptcy and company insolvency life doesn't just continue on as if nothing had happened, there are consequences in terms of future access to credit and the ability to continue the life style that led to the problem in the first place (unless you're a z list celebrity, bankruptcy appears to have little meaning for them). Greece appears to want their debts written off, the clock reset, and the whole cycle of debt/over spending to continue, and remain within the Eurozone. does anyone remember that going back a year or four, somebody posted a colour coded world (?European map)showing the private and public debt of all the countries but it also included a breakdown of their creditors ie which banks and countries were most exposed to Grexit etc.
I would be fascinated to see the 2010 map and the current one in line with the comments i made in my previous post.
I would be fascinated to see the 2010 map and the current one in line with the comments i made in my previous post.
RYH64E said:
Andy Zarse said:
Hey, before we get on to this subject, any chance of you answering the question about how Greece can afford to pay its debts. You know, showing us your calculations, statistics, assumptions, tax revenues, GDP and other tedious realities.
Greece can't pay it's debts, obviously. Default is the the sensible course, just as an individiual that can't pay his/her debts goes bankrupt and an insolvent company begins the liquidation process. The question is, what next for Greece? In the case of personal bankruptcy and company insolvency life doesn't just continue on as if nothing had happened, there are consequences in terms of future access to credit and the ability to continue the life style that led to the problem in the first place (unless you're a z list celebrity, bankruptcy appears to have little meaning for them). Greece appears to want their debts written off, the clock reset, and the whole cycle of debt/over spending to continue, and remain within the Eurozone. Taking the Violet Elizabeth Bott tactic, she thinks Greece thimply has to pay it all back otherwise it's not fair and she will scweam and scweam until she makes herself thick.
And we don't want that do we.
Guam said:
Claudia Skies said:
I don't think you've quite grasped the way it works....
Yes yes I have, the question is a fair one if you thought about it for a moment, Greek Euros are Greek Euros (linguistically speaking), if they decided just to print to undertake QE what could happen.What would happen, this situation is severe enough potentially that if they are desperate enough they could decide to do anything they like.
Could this be prevented?
If so how.
It was an out there question I admit, however with the way this confrontation is shaping up as evidenced by this.
http://www.telegraph.co.uk/finance/economics/11373...
Is there anything to physically stop Greece just printing more Euros?
I suspect Europol would be in there sharpish and/or they'd get booted out of the EU. Or maybe difficult MP's would just be replaced, as we've seen before more than once.
Andy Zarse said:
Agreed, In fact everyone on here is agreed about this.
What I haven't seen is any sensible proposals for 'what next?'. Some appear to believe that Greece's problems are all the fault of the euro, and exit coupled with a devalued New Drachma will ensure a prosperous future funded by (slightly) cheaper holidays and olive exports. I don't see it, in fact I can't see a scenario that provides the standard of living many in Greece have become used to, with the state funded services and infrastructure that Socialists are so fond of. If I were a Greek, I'd be withdrawing whatever euros I had in the bank whilst there's still some to take (and before they're converted to worthless New Drachma), selling all my assets before the government taxes/confiscates them, and taking advantage of the 'free movement of labour' by booking a one way flight to somewhere else in the EU, probably the UK.
Esseesse said:
I understood your point. Yes Euro printing is centralised, but Greece could break the rules. If they declared their printed Euros (indistinguishable or not) as legal tender what would be the knock on effect.
I suspect Europol would be in there sharpish and/or they'd get booted out of the EU. Or maybe difficult MP's would just be replaced, as we've seen before more than once.
Actually issuance of € notes and coins and daily management of liquidity is carried out by national central banks under direction of the ECB.I suspect Europol would be in there sharpish and/or they'd get booted out of the EU. Or maybe difficult MP's would just be replaced, as we've seen before more than once.
€ coins are marked with country of issue and the first digit on the serial number on notes shows the country.
While we tend to think of expanding money supply by physical printing notes. Notes and coins make up a very small amount of the money supply so it not a very effective way. QE (buying the Government bonds without borrowing) is much more efficient.
The answer is that the Greek Central Bank can print more notes and coins or start QE. However, Greece would then be in breach of the treaty establishing the €.
RYH64E said:
Andy Zarse said:
Agreed, In fact everyone on here is agreed about this.
What I haven't seen is any sensible proposals for 'what next?'. Some appear to believe that Greece's problems are all the fault of the euro, and exit coupled with a devalued New Drachma will ensure a prosperous future funded by (slightly) cheaper holidays and olive exports. I don't see it, in fact I can't see a scenario that provides the standard of living many in Greece have become used to, with the state funded services and infrastructure that Socialists are so fond of. If I were a Greek, I'd be withdrawing whatever euros I had in the bank whilst there's still some to take (and before they're converted to worthless New Drachma), selling all my assets before the government taxes/confiscates them, and taking advantage of the 'free movement of labour' by booking a one way flight to somewhere else in the EU, probably the UK.
Given such a massive swing in Greece against the austerity measures and in favour of changing the game plan I cannot see how the EU are going to manage any of this. However I do not think the EU can afford to ignore the entreaties of Greece for assistance. All getting very much a pressing matter and I assume that official statements will emanate from the EU stating their views. I cannot see how this conundrum can be solved nor I suspect can the EU leaders.
The EU have managed to wangle the situation so that the Greek debts have much less effect on the EU banks all the liability and cost thereof being passed to the EU taxpayers of course. But we all knw that the EU taxpayers are helpless victims for the delusions of grandeur within the EU. I can see no fix for this Greek position whatsoever. I wonder how far Mario's famous 'As much as it iakes,' promise' and massive QE will hold the position for the EU?
Such a massive QE gamble without any real chance of success and without any long term capital projects being created reflecting real value long term from the QE is deliberate fraud on the taxpayers IMO. Quite dsgraceful and it will not work. The Hoover Dam in the USA is a shining example of how QE should be used. This is just gambling on a slight chance with someone else's hard earned money. With a very good chance of complete disaster. But the politicians will escape blame easily as we know from recent experience.
Steffan said:
RYH64E said:
Andy Zarse said:
Agreed, In fact everyone on here is agreed about this.
What I haven't seen is any sensible proposals for 'what next?'. Some appear to believe that Greece's problems are all the fault of the euro, and exit coupled with a devalued New Drachma will ensure a prosperous future funded by (slightly) cheaper holidays and olive exports. I don't see it, in fact I can't see a scenario that provides the standard of living many in Greece have become used to, with the state funded services and infrastructure that Socialists are so fond of. If I were a Greek, I'd be withdrawing whatever euros I had in the bank whilst there's still some to take (and before they're converted to worthless New Drachma), selling all my assets before the government taxes/confiscates them, and taking advantage of the 'free movement of labour' by booking a one way flight to somewhere else in the EU, probably the UK.
but nevertheless in agreement with your point, my niece's husband did exactly that several years ago. He's now in London - with the neice - and they've just bought their first house also in London so doing OK. He made the right move.Steffan said:
Given such a massive swing in Greece against the austerity measures and in favour of changing the game plan I cannot see how the EU are going to manage any of this.
Nobody likes being poor, it's not much fun, but short of the EU continually subsidising Greece I don't see how austerity can end. They've not got enough money of their own, surely no sensible institution will lend them any more, they've stuck two fingers up to the Germans, and their plan of telling the EU that they can't pay back their existing loans but need some more pdq doesn't seem very well thought out. An end to austerity? The EU should just say 'Good luck with that, let us know how you get on' imo.
RYH64E said:
Steffan said:
Given such a massive swing in Greece against the austerity measures and in favour of changing the game plan I cannot see how the EU are going to manage any of this.
Nobody likes being poor, it's not much fun, but short of the EU continually subsidising Greece I don't see how austerity can end. They've not got enough money of their own, surely no sensible institution will lend them any more, they've stuck two fingers up to the Germans, and their plan of telling the EU that they can't pay back their existing loans but need some more pdq doesn't seem very well thought out. An end to austerity? The EU should just say 'Good luck with that, let us know how you get on' imo.
RYH64E said:
What I haven't seen is any sensible proposals for 'what next?'.
Yes now we come to the tricky bit...There is no easy solution. Default and devalue sure, but the problem is banking liquidity. As soon as the ECB ELA support is withdrawn then the banks collapse. Normally you would expect the IMF to step into the breach in such emergencies. This was their original role and it's what they, and the World Bank, were set up to do all those years ago. Sadly the IMF, under first DS-K and now Madame Christine L'Orange, have become little more than a tool of the EU/ECB and are now under the influence of politicians not economists.
Maybe the Greeks could turn to say China, or I guess the World Bank, although Greece is out of their geographical area of influence.
Whatever, it's going to be a very difficult future. That said, this course does at least offer some hope. Paying off increasing debts doesn't; that's why Syriza is now in power. What was it Claudia said about politics trumping economics again?
Guam said:
Mrr T said:
Actually issuance of € notes and coins and daily management of liquidity is carried out by national central banks under direction of the ECB.
€ coins are marked with country of issue and the first digit on the serial number on notes shows the country.
While we tend to think of expanding money supply by physical printing notes. Notes and coins make up a very small amount of the money supply so it not a very effective way. QE (buying the Government bonds without borrowing) is much more efficient.
The answer is that the Greek Central Bank can print more notes and coins or start QE. However, Greece would then be in breach of the treaty establishing the €.
Which is what I thought€ coins are marked with country of issue and the first digit on the serial number on notes shows the country.
While we tend to think of expanding money supply by physical printing notes. Notes and coins make up a very small amount of the money supply so it not a very effective way. QE (buying the Government bonds without borrowing) is much more efficient.
The answer is that the Greek Central Bank can print more notes and coins or start QE. However, Greece would then be in breach of the treaty establishing the €.
So what would occur under the treaty?
Could Greece print a shedload of Euros and give them to the populace to nip across the border to other states to buy stuff lol
I wonder what it would be like if the tables turn - the Germans want to cut their losses and set Greece adrift but it won't go? Is there any mechanism to remove a member state from the Euro? I bet not.
turbobloke said:
Steffan said:
RYH64E said:
Andy Zarse said:
Agreed, In fact everyone on here is agreed about this.
What I haven't seen is any sensible proposals for 'what next?'. Some appear to believe that Greece's problems are all the fault of the euro, and exit coupled with a devalued New Drachma will ensure a prosperous future funded by (slightly) cheaper holidays and olive exports. I don't see it, in fact I can't see a scenario that provides the standard of living many in Greece have become used to, with the state funded services and infrastructure that Socialists are so fond of. If I were a Greek, I'd be withdrawing whatever euros I had in the bank whilst there's still some to take (and before they're converted to worthless New Drachma), selling all my assets before the government taxes/confiscates them, and taking advantage of the 'free movement of labour' by booking a one way flight to somewhere else in the EU, probably the UK.
but nevertheless in agreement with your point, my niece's husband did exactly that several years ago. He's now in London - with the neice - and they've just bought their first house also in London so doing OK. He made the right move.One of his most frequent epithets was 'Get on a fast moving train to be successful in business' you can be a mere passenger and still beat the rest.' I think taking a serious view of where best to live and where life is more likely to be secure and enjoyable is the duty of every individual as they quality in their field.. Opportunities and untapped natural resources in Canada are still at the stage that these were in the UK 100 years ago. In the UK now we are an ageing society with falling resources.
I would not attempt to continue to live in Greece if i was living there and qualified because I think life there is going to become very very difficult. The same must be true of the other failing states. None of this is going to end well for anyone in the affected countries. Use your education to its best advantage is my fervant advice. Do not stay in countres that have ruined themselves with daft Socialist spending. Which is exactly what Greece has done. No easy fixes. I do not see much of a life there nowadays. For many many years.
but do you trust the numbers?Andy Zarse said:
RYH64E said:
Andy Zarse said:
Hey, before we get on to this subject, any chance of you answering the question about how Greece can afford to pay its debts. You know, showing us your calculations, statistics, assumptions, tax revenues, GDP and other tedious realities.
Greece can't pay it's debts, obviously. Default is the the sensible course, just as an individiual that can't pay his/her debts goes bankrupt and an insolvent company begins the liquidation process. The question is, what next for Greece? In the case of personal bankruptcy and company insolvency life doesn't just continue on as if nothing had happened, there are consequences in terms of future access to credit and the ability to continue the life style that led to the problem in the first place (unless you're a z list celebrity, bankruptcy appears to have little meaning for them). Greece appears to want their debts written off, the clock reset, and the whole cycle of debt/over spending to continue, and remain within the Eurozone. Taking the Violet Elizabeth Bott tactic, she thinks Greece thimply has to pay it all back otherwise it's not fair and she will scweam and scweam until she makes herself thick.
And we don't want that do we.
Where I think Claudia is correct is that the 'solution' that is arrived at will owe more to politics than economics, as in fact the whole Euro project has always been. 'How do you default without defaulting?' seems to me to be the central question. I predict a bodge - some kind of formula whereby Greece remains indebted and their loans can stay on the balance sheet, but they don't have to pay anything back before their economy shows signs of revival, perhaps a GDP growth figure. The negotiation of a formula too complex for most people in the street to understand would leave huge amounts of leeway for spinning the outcome.
This saves face on both sides, all concerned can claim a victory to their public, the can is kicked down the road again, and we wait for the next crisis....
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