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

[Digga]

Andy Zarse said:

hora said:

When Greece exits the Euro- how are the Greeks going to fund their wages/lifestyle/current economy?

Easy. The Greeks don't currently have a lifestyle. Cveryfew go on holiday or have anything more than very basic healthcare.

Yes, it is difficult for people to appreciate the reality. Out in the sticks, it's a bit better, because they have the benefits of smallholdings/forage/barter, but in some urban areas, it must be desperate.

Event in the post Euro years of plenty, things that we take for granted like bin collections were patchy at best. Healthcare is yet another areas where, whilst theoretically state provided, has been hi-jacked by the brown envelopes of the black market, for those who can afford.

Threats made by the government about taxing holidays that they don't like (all inclusive being the first example) are hardly likely to make tour operators or holidaymakers more likely to visit. Utterly moronic.

[Esseesse]

Eurozone heads towards 'protracted' deflation as bloc hit by record price drop
Prices fall by 0.6pc across the 19-nation single currency area in January as energy costs continue to tumble

http://www.telegraph.co.uk/finance/economics/11379...

[Digga]

Excellent comment from Alexis Tsipras' open letter to Germany here:

http://www.zerohedge.com/news/2015-01-29/alexis-ts...

Elsewhere, some comments attributed to him - not least those about Russia and the Ukraine - appear less rational. I fear for his safety if even half of them are factually correct.

[wc98]

Digga said:

Excellent comment from Alexis Tsipras' open letter to Germany here:

http://www.zerohedge.com/news/2015-01-29/alexis-ts...

Elsewhere, some comments attributed to him - not least those about Russia and the Ukraine - appear less rational. I fear for his safety if even half of them are factually correct.

i think i like alexis

[RYH64E]

Digga said:

Excellent comment from Alexis Tsipras' open letter to Germany here:

http://www.zerohedge.com/news/2015-01-29/alexis-ts...

Elsewhere, some comments attributed to him - not least those about Russia and the Ukraine - appear less rational. I fear for his safety if even half of them are factually correct.

I think he's missing the main point of the bailout which was to transfer Greek debt from the banks to the EU taxpayer. Greece should have been allowed to default back in 2010, at which time the losses would have been borne by the original lending institutions.

[Digga]

RYH64E said:

Digga said:

Excellent comment from Alexis Tsipras' open letter to Germany here:

http://www.zerohedge.com/news/2015-01-29/alexis-ts...

Elsewhere, some comments attributed to him - not least those about Russia and the Ukraine - appear less rational. I fear for his safety if even half of them are factually correct.

I think he's missing the main point of the bailout which was to transfer Greek debt from the banks to the EU taxpayer. Greece should have been allowed to default back in 2010, at which time the losses would have been borne by the original lending institutions.

No, if you check, he does say this - that there was no way they could ever repay.

As we've all discussed, there are implications here for other benighted countries, as they head to the poll booths.

[Walford]

Guam said:

The only surprising thing in all this, is how long it took the mainstream "pundits" to figure it out!

or is there another reason, a lot of the press, have not come out with "impossible" before
,

[LongQ]

Not specifically about the Euro or Euroland but it seems that Crispin Odey seems to be anticipating a potential Equity meltdown of enormous proportions.

http://www.dailymail.co.uk/news/article-2932273/Be...


If correct perhaps we all need to think in terms of #jesuisgreek. (Or #jesuisgrecque for those of a disposition Francais).

Or maybe #illsinkwithyou ?


Social mobility. You have to love it.

[arguti]

RYH64E said:

I think he's missing the main point of the bailout which was to transfer Greek debt from the banks to the EU taxpayer. Greece should have been allowed to default back in 2010, at which time the losses would have been borne by the original lending institutions.

Totally on the money which is why Sarkozy was so desperate to get the bailout agreed as IIRC French banks would have been left holding the baby as it were!

[RYH64E]

Digga said:

No, if you check, he does say this - that there was no way they could ever repay.

As we've all discussed, there are implications here for other benighted countries, as they head to the poll booths.

No you're missing the point. Effectively what happened was the EU gave Greece a loan so that they could pay back what they owed the banks, thus transferring the debt from the banks to the EU. Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected, today that situation has reversed. Default was inevitable, the choice of creditor to take the hit wasn't.

Edited by RYH64E on Friday 30th January 14:08

[Steffan]

Digga said:

Excellent comment from Alexis Tsipras' open letter to Germany here:

http://www.zerohedge.com/news/2015-01-29/alexis-ts...

Elsewhere, some comments attributed to him - not least those about Russia and the Ukraine - appear less rational. I fear for his safety if even half of them are factually correct.

Excellent very informative post Digga and absolutely on the button of this thread. In reality Greece shoud have fallen from the Euro at the time of the original bailout. Lending money to already insolvent organisations s economic madness and various comments on this thread have highlighted that the opportunity this offered to offload debt from French banks and other EU banks who were desperately exposed at the time, was the reasoning behind this. Not any desire to help Greece. Hence Sarkozys deperation to get this deal.

Greeca cannot afford to continue within the EU and that fact is now finally being admitted. The EU have fiddled this matter dishonestly throughout this affair and are trying to fiddle it once again currently. The truth is as Tsipras is suggested to have said this is totally unaffordable for Greece. It will be interesting to see how the PR spinners in the EU try to spin this away. I think they are going to struggle. Greece needs as a country to default and restructure ther whole approach to business, public welfare, pensions and taxation indeed theur whole economy needs reassessing ad revitalising. Greece must seek to rectifying their insolvency. At least then they can start to rebuild the situation in Greece. What Greece cannot do is afford to pay these debts.

[Walford]

RYH64E said:

Digga said:

No, if you check, he does say this - that there was no way they could ever repay.

As we've all discussed, there are implications here for other benighted countries, as they head to the poll booths.

No you're missing the point. Effectively what happened was the EU gave Greece a loan so that they could pay back what they owed the banks, thus transferring the debt from the banks to the EU. Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected, today that situation has reversed. Default was inevitable, the choice of creditor to take the hit wasn't.

Edited by RYH64E on Friday 30th January 14:08

When Gorden Brown "saved the world" the UK tax payer stood in because the UK banks were "to big to fail"

Now when the PIGS default the EU tax payer will stand the losses, this is avoids the original scenario of British and German tax payers bailing out french banks,

that would have been a very hot political potato

[anonymous-user]

RYH64E said:

Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected

I agree the loss has effectively been transfered from the banks to the state but in what scanario would bankrupting almost every bank in the EU not massively fvck the EU taxpayer?

[RYH64E]

fblm said:

RYH64E said:

Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected

I agree the loss has effectively been transfered from the banks to the state but in what scanario would bankrupting almost every bank in the EU not massively fvck the EU taxpayer?

If the EU had to bail the banks out (again) there would at least be some prospect of getting their money back eventually, they're never going to get anything back from Greece.

[Digga]

RYH64E said:

fblm said:

RYH64E said:

Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected

I agree the loss has effectively been transfered from the banks to the state but in what scanario would bankrupting almost every bank in the EU not massively fvck the EU taxpayer?

If the EU had to bail the banks out (again) there would at least be some prospect of getting their money back eventually, they're never going to get anything back from Greece.

Zero sum gain though, in reality - wherever the bailout is directed, the magnitude would be the same.

If anything, the reduction of speculation and uncertainty surrounding the banks would have been worse.

[RYH64E]

Digga said:

Zero sum gain though, in reality - wherever the bailout is directed, the magnitude would be the same.

If anything, the reduction of speculation and uncertainty surrounding the banks would have been worse.

I believe that the UK taxpayer is expecting to get their bail out money back from the banks, eventually, and with interest, if the EU had had to bail out the EU banks back in 2010 they could probably expect the same.

The EU taxpayer is very unlikely to get their bail out money back from Greece, but they probably would have from the banks.

So no, not zero-sum game for the banks (massive gain) or EU taxpayer (massive loss), and not for greece either as they've had a further 4 years of pain.

[fido]

Digga said:

RYH64E said:

fblm said:

RYH64E said:

Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected

I agree the loss has effectively been transfered from the banks to the state but in what scanario would bankrupting almost every bank in the EU not massively fvck the EU taxpayer?

If the EU had to bail the banks out (again) there would at least be some prospect of getting their money back eventually, they're never going to get anything back from Greece.

Zero sum gain though, in reality - wherever the bailout is directed, the magnitude would be the same.

If anything, the reduction of speculation and uncertainty surrounding the banks would have been worse.

It would have been better value (to the taxpayer) for the ECB to have bought the Greek debt from Banks in 2010 and left Greece to default / re-finance on the market. Look at it as QE! Bondholders have subsequently incurred write-downs (which are mini-defaults anyway) and they ended up lending even more money to Greece. But lest not forget, the whole point of this futile exercise was not about economics but politics.

Edited by fido on Friday 30th January 18:44

[anonymous-user]

RYH64E said:

fblm said:

RYH64E said:

Had Greece defaulted in 2010 the banks would have been stuffed but the EU taxpayer largely unaffected

I agree the loss has effectively been transfered from the banks to the state but in what scanario would bankrupting almost every bank in the EU not massively fvck the EU taxpayer?

If the EU had to bail the banks out (again) there would at least be some prospect of getting their money back eventually, they're never going to get anything back from Greece.

OK I see your logic but think you are wrong. Certainly they arn't going to get their money back from Greece but the alternative of letting the banks drown then rescue them could precipitate far greater losses. Financial markets are contagious. You might well get back half your 'investment' rescuing the banks but the losses could very easily balloon far greater then double the original loss leaving you out of pocket. The decision was pretty simple, massive known loss to Greece or massive unknown, potentially catastrophic, loss rescuing the banks. The UK made the same choice with RBS for the same reason.

[wc98]

fido said:

But lest not forget, the whole point of this futile exercise was not about economics but politics.

spot on, it is very easy to become bewildered with the insanity of the situation without constant reminders that no matter what the bankers ,economists and anyone with half a brain say,it is political ideology driving the situation and nothing else.

[RYH64E]

fblm said:

OK I see your logic but think you are wrong. Certainly they arn't going to get their money back from Greece but the alternative of letting the banks drown then rescue them could precipitate far greater losses. Financial markets are contagious. You might well get back half your 'investment' rescuing the banks but the losses could very easily balloon far greater then double the original loss leaving you out of pocket. The decision was pretty simple, massive known loss to Greece or massive unknown, potentially catastrophic, loss rescuing the banks. The UK made the same choice with RBS for the same reason.

And are we expecting to get our money back from RBS?