Is the end nigh for the Euro? [vol. 3]
Discussion
Claudia Skies said:
turbobloke said:
Ideology gets in the way sooner or later or all the time.
So what is your brilliant "solution" for Greece?What others are saying, which makes sense, is a combination of formal default and dropping the Euro in a return to the Drachma. Each follows from the other. Putting monetary policy back under Greek government control is only the start, there's still a greater need for pragmatism than ideology and that will be difficult for a far-left administration and even for one less far such as the EU, which would see its pet project display the first fracture line that wasn't covered over with make-believe filler. With Greece recovering after the initial shocks, the question then is how many more would follow - not something the EU wants to contemplate so strongarming attempts are on the cards.
Mermaid said:
Greece's idea is a 50% haircut - so now the negotiations start.
IIRC there was a 50% haircut agreed in 2011. How many times?50% = default?
http://www.bloomberg.com/news/articles/2011-10-28/...
Voluntary 50% act where 50% wasn't half.
http://www.dw.de/greek-haircut-when-50-percent-is-...
How voluntary is voluntary when the self-aggrandising project is at risk...
http://www.theguardian.com/business/blog/2011/oct/...
turbobloke said:
Agreed but what next?
He / they are in Liam Byrne territory and need to move on from there.
well exactly!He / they are in Liam Byrne territory and need to move on from there.
either one (or both) of them blinks, or they default.
I see another face saving fudge coming but really would like to see them exit the Euro, devalue and start the healing process.
NicD said:
turbobloke said:
Agreed but what next?
He / they are in Liam Byrne territory and need to move on from there.
well exactly!He / they are in Liam Byrne territory and need to move on from there.
either one (or both) of them blinks, or they default.
I see another face saving fudge coming but really would like to see them exit the Euro, devalue and start the healing process.
The players in the EU care more for the EZ and EU than for the country and people of Greece, the only other thing they care about at that level is polishing their own ego and saving face, so if anything major is going to happen it must not be on their watch. The potential for fudges is there from the EU side.
The old accepted definition of Insolvency used to be that the individual, or organisation was Insolvent when it could not pay its debt "As and when they fell due". This allowed for cirumstances where a cash flow problem could be argued not to be actual Insolvency because in time the Insolvent body could pay its debts. Unfortunately this led to a lot of very dishonest trading.
To a large extent this still holds true but the various Comanies Acts introduced over the last 40 years have sought to tighten this up so that every responsible person or Director could be sued personally if it became apparent that they had in fact been "Trading with a knowledge of Insolvency." The Shadow Director legislation sought to make this very difficult. It succeeded in part. The Proceeds of Serious Crime legislation has really limited this practice much more effectively. A distinctly draconian approach visibly altered the attractions of such dubious trading.
It is still unfortunately possible to ride roughshod over the rules and many still do but this is less easily achieved by the crooks than it was. The Marine Fire and Auto scandal was one of the cases which highlighted the sharp practice and brought approbation on the directors thereof who quite rightly went to jail which was very rare indeed back at that time. Emile Savundra was a very very clever out and out crook.
Turning to the Greek position I am reminded of the old "Beware of Greeks bearing gifts" warning from the Trojan wars of long ago, I think. The Greek government is thinking on its feet and playing for the best advantage with the EU. The difficulty IMO is that Greece cannot afford to repay these loans. The EU is clearly indicating that they are not giving anything further. It really does seem to me that the EU are the only organisation who can find an accommodation here or Greece will leave the EU. Not an easy matter anymore and all the eyes of the other failing states must be upon the EU position in this matter currently.
I cannot see how the Greece can continue within the EU. I do wonder what the EU will do. I do think the EA not accepting that Greece cannot afford this debt will simply push the problem forward and this problem will rearise once again when the next Greek government is elected. Which will very probably not be very long at all. This is not a sustainable debt for Greece and I can only see Greece leaving the EU orr that reason. But the printing presses of the EU may well be abused once more to buy more very expensive time for the EU. Curiouser and Curioser said Alice, for me!
To a large extent this still holds true but the various Comanies Acts introduced over the last 40 years have sought to tighten this up so that every responsible person or Director could be sued personally if it became apparent that they had in fact been "Trading with a knowledge of Insolvency." The Shadow Director legislation sought to make this very difficult. It succeeded in part. The Proceeds of Serious Crime legislation has really limited this practice much more effectively. A distinctly draconian approach visibly altered the attractions of such dubious trading.
It is still unfortunately possible to ride roughshod over the rules and many still do but this is less easily achieved by the crooks than it was. The Marine Fire and Auto scandal was one of the cases which highlighted the sharp practice and brought approbation on the directors thereof who quite rightly went to jail which was very rare indeed back at that time. Emile Savundra was a very very clever out and out crook.
Turning to the Greek position I am reminded of the old "Beware of Greeks bearing gifts" warning from the Trojan wars of long ago, I think. The Greek government is thinking on its feet and playing for the best advantage with the EU. The difficulty IMO is that Greece cannot afford to repay these loans. The EU is clearly indicating that they are not giving anything further. It really does seem to me that the EU are the only organisation who can find an accommodation here or Greece will leave the EU. Not an easy matter anymore and all the eyes of the other failing states must be upon the EU position in this matter currently.
I cannot see how the Greece can continue within the EU. I do wonder what the EU will do. I do think the EA not accepting that Greece cannot afford this debt will simply push the problem forward and this problem will rearise once again when the next Greek government is elected. Which will very probably not be very long at all. This is not a sustainable debt for Greece and I can only see Greece leaving the EU orr that reason. But the printing presses of the EU may well be abused once more to buy more very expensive time for the EU. Curiouser and Curioser said Alice, for me!
turbobloke said:
NicD said:
turbobloke said:
Agreed but what next?
He / they are in Liam Byrne territory and need to move on from there.
well exactly!He / they are in Liam Byrne territory and need to move on from there.
either one (or both) of them blinks, or they default.
I see another face saving fudge coming but really would like to see them exit the Euro, devalue and start the healing process.
The players in the EU care more for the EZ and EU than for the country and people of Greece, the only other thing they care about at that level is polishing their own ego and saving face, so if anything major is going to happen it must not be on their watch. The potential for fudges is there from the EU side.
RYH64E said:
turbobloke said:
NicD said:
turbobloke said:
Agreed but what next?
He / they are in Liam Byrne territory and need to move on from there.
well exactly!He / they are in Liam Byrne territory and need to move on from there.
either one (or both) of them blinks, or they default.
I see another face saving fudge coming but really would like to see them exit the Euro, devalue and start the healing process.
The players in the EU care more for the EZ and EU than for the country and people of Greece, the only other thing they care about at that level is polishing their own ego and saving face, so if anything major is going to happen it must not be on their watch. The potential for fudges is there from the EU side.
Or, maybe not - but they will have more tools at their disposal to clean up the mess they make in their own backyard with the hated troika out of the equation and no more EU psuedo-colonialism to bear.
RYH64E said:
Yes, maybe if Greece leaves the eurozone they will return to being the prosperous, financially prudent, economic powerhouse that they were before they joined... Having just elected a far left government who firmly believe that spending more money is the answer to their problems can only help I'm sure.
Harsh?Only time will tell.
turbobloke said:
The players in the EU care more for the EZ and EU than for the country and people of Greece, the only other thing they care about at that level is polishing their own ego and saving face,
I see from your post count that you've now said exactly the same thing more than 63,000 times....Why not step away from your keyboard for a few hours, buy a ticket to the continent and have a look around? You might to be surprised to find out just how similar "they" are to "us".
Claudia Skies said:
I see from your post count that you've now said exactly the same thing more than 63,000 times....
Why not step away from your keyboard for a few hours, buy a ticket to the continent and have a look around? You might to be surprised to find out just how similar "they" are to "us".
Very true all around the continent we all face the exact same problem which is the EU. It has failed miserably and the longer they continue to fudge it all together the misery will continue. Why not step away from your keyboard for a few hours, buy a ticket to the continent and have a look around? You might to be surprised to find out just how similar "they" are to "us".
Claudia Skies said:
I think there will be a further "package" for Greece and that it will come with significant strings attached. What those strings will be and how they will attached remains to be seen.
Unlike the last package, whose 'significant strings' they have just rejected? I suppose it will be different this time.Claudia Skies said:
turbobloke said:
The players in the EU care more for the EZ and EU than for the country and people of Greece, the only other thing they care about at that level is polishing their own ego and saving face,
I see from your post count that you've now said exactly the same thing more than 63,000 times....
jogon said:
Claudia Skies said:
I see from your post count that you've now said exactly the same thing more than 63,000 times....
Why not step away from your keyboard for a few hours, buy a ticket to the continent and have a look around? You might to be surprised to find out just how similar "they" are to "us".
Very true all around the continent we all face the exact same problem which is the EU. It has failed miserably and the longer they continue to fudge it all together the misery will continue. Why not step away from your keyboard for a few hours, buy a ticket to the continent and have a look around? You might to be surprised to find out just how similar "they" are to "us".
RYH64E said:
Claudia Skies said:
I think there will be a further "package" for Greece and that it will come with significant strings attached. What those strings will be and how they will attached remains to be seen.
Unlike the last package, whose 'significant strings' they have just rejected? I suppose it will be different this time.Mermaid said:
RYH64E said:
Claudia Skies said:
I think there will be a further "package" for Greece and that it will come with significant strings attached. What those strings will be and how they will attached remains to be seen.
Unlike the last package, whose 'significant strings' they have just rejected? I suppose it will be different this time.How this will pan out is a moot point. But Greece is beyond the point of no return financially. Regrettably Greece cannot therefore recover. The EU could wipe their debt out in an instant with their printing presses. I doubt the EU will actually do that because of the obvious precedent in relation to the otherr failing states in which case some sort of default is inevitable. Not a sustainable position IMO. Lots of warm words and handwringing all round confirming how sad this is. But default is coming.
Unfortunately no actual solutions which the EU have promised for literally years in the cases of all the failing states are actually possible, as can now be clearly seen, the EU do not have a "Solution" at all. Bulls
t baffles brains but only for so long. Whatever the EU and Greece cobble together short term, in reality as Mermad rightly confirms, "business as usual" plasters are not going to work. Surgery is required. The above is only valid if your objective is to create a strong Euro with a group of member states heading for economic alignment. I don't think that is true now, nor has been for a long time.
Have a read of the attached:-
http://moneyweek.com/merryns-blog/whos-subsidising...
Now I am by and large very pro-German. However, you need to understand the realities here. The EEC was set up originally to allow Germany to re-industrialise after 1945 while subsidizing less efficient European countries, France in particular. It was never any kind of a fair deal, especially for latecomers like Britain. This was the foundation of the 'Wirtschaftswunder'. By the late 60's and 70's the intrinsic problem with the 'Wirtschaftswunder' was clear. The Deutschmark had increased in value exponentially so Germany now exported against the tide of its currency. Germans still felt pretty good because they could build up savings in D-Mark and these were not inflated away in the way the British government used to do until the Brits got too smart to try to save.
Britain's entry to the EEC was managed on the basis that it would share the costs of subsidy with Germany, but it was an industrially crippled nation which might benefit from financial trade with Europe but would struggle to compete with Germany industrially. So it worked out, and Britain has survived, even done well, by selling its industries out to foreign ownership in a way which would not, for now at least, be acceptable in Germany.
The experience of re-unification taught Germany the value of a weakened currency. IMHO this drove the common currency policy. The basis of this is that Germany trades in a currency which is weakened by nations like Greece and Italy, maybe makes the occasional profit from a one way bet as set out in the Merryn Somerset Webb article, but constantly expands its industrial muscle. Yes it does have to subsidize the rest of Europe, but what the average German does not immediately appreciate is the benefit to Germany by doing so. That is partly because salary levels in Germany have to be kept low to keep the industrial machine efficient. There is a colossal amount of wealth in Germany but this policy has concentrated it in into a small number of hands. To make this workable, everything in Germany is cheap except land (there is a big rented sector) and manufactured goods, which are of course going to export. It is a lot cheaper to buy a Porsche in Britain than it is in Germany. That is quite deliberate. However Germany is sitting on a powderkeg of industrial unrest which only their remarkable pride and discipline keep from exploding.
Britain was only going ever to be accepted into the ERM and Euro on the basis of an inflated value for the Pound Sterling. In this way not only could it not compete industrially with Germany, it would be industrially eviscerated.
Consequently, what Syriza have realised is that Greece is actually in a far stronger position than everyone assumes. We all thought that Syriza was going to tell the EU to take a hike. They are not. They are going to tell them to sort the problem or Greece will walk. And that is something German politicians cannot afford to allow to happen,because the last thing they want is a strong Euro.
They are now going to print Euros. That carries its own risks, because Germans will experience inflation, and their saving habit will be blown, and the last time that happened on a large scale was 1922. The solution will be how they use the Euros they print, and my advice to them would be to set up a proper and generous pension system in Germany (unlike the rip-off system in Britain which is going to explode in a month or two) which does not hold currency. That will allow them to reinforce the benefit of work, and boost saving at the same time. The only thing they have to do is not to pass the management of it into private hands as Margaret Thatcher did to us, allowing unskilled criminals and financial manipulators to take huge percentages out of private pension pots which were not properly invested.
Have a read of the attached:-
http://moneyweek.com/merryns-blog/whos-subsidising...
Now I am by and large very pro-German. However, you need to understand the realities here. The EEC was set up originally to allow Germany to re-industrialise after 1945 while subsidizing less efficient European countries, France in particular. It was never any kind of a fair deal, especially for latecomers like Britain. This was the foundation of the 'Wirtschaftswunder'. By the late 60's and 70's the intrinsic problem with the 'Wirtschaftswunder' was clear. The Deutschmark had increased in value exponentially so Germany now exported against the tide of its currency. Germans still felt pretty good because they could build up savings in D-Mark and these were not inflated away in the way the British government used to do until the Brits got too smart to try to save.
Britain's entry to the EEC was managed on the basis that it would share the costs of subsidy with Germany, but it was an industrially crippled nation which might benefit from financial trade with Europe but would struggle to compete with Germany industrially. So it worked out, and Britain has survived, even done well, by selling its industries out to foreign ownership in a way which would not, for now at least, be acceptable in Germany.
The experience of re-unification taught Germany the value of a weakened currency. IMHO this drove the common currency policy. The basis of this is that Germany trades in a currency which is weakened by nations like Greece and Italy, maybe makes the occasional profit from a one way bet as set out in the Merryn Somerset Webb article, but constantly expands its industrial muscle. Yes it does have to subsidize the rest of Europe, but what the average German does not immediately appreciate is the benefit to Germany by doing so. That is partly because salary levels in Germany have to be kept low to keep the industrial machine efficient. There is a colossal amount of wealth in Germany but this policy has concentrated it in into a small number of hands. To make this workable, everything in Germany is cheap except land (there is a big rented sector) and manufactured goods, which are of course going to export. It is a lot cheaper to buy a Porsche in Britain than it is in Germany. That is quite deliberate. However Germany is sitting on a powderkeg of industrial unrest which only their remarkable pride and discipline keep from exploding.
Britain was only going ever to be accepted into the ERM and Euro on the basis of an inflated value for the Pound Sterling. In this way not only could it not compete industrially with Germany, it would be industrially eviscerated.
Consequently, what Syriza have realised is that Greece is actually in a far stronger position than everyone assumes. We all thought that Syriza was going to tell the EU to take a hike. They are not. They are going to tell them to sort the problem or Greece will walk. And that is something German politicians cannot afford to allow to happen,because the last thing they want is a strong Euro.
They are now going to print Euros. That carries its own risks, because Germans will experience inflation, and their saving habit will be blown, and the last time that happened on a large scale was 1922. The solution will be how they use the Euros they print, and my advice to them would be to set up a proper and generous pension system in Germany (unlike the rip-off system in Britain which is going to explode in a month or two) which does not hold currency. That will allow them to reinforce the benefit of work, and boost saving at the same time. The only thing they have to do is not to pass the management of it into private hands as Margaret Thatcher did to us, allowing unskilled criminals and financial manipulators to take huge percentages out of private pension pots which were not properly invested.
Steffan said:
The Greeks clearly do not want nor can they actually afford to be within the Euro, a currency that was always beyond their real economic position.
But Greece does want to remain within the Eurozone, 70% or so of Greeks want to keep the euro, maybe because they have recent experience of a devalued and unstable currency and don't want to go back there.RYH64E said:
Steffan said:
The Greeks clearly do not want nor can they actually afford to be within the Euro, a currency that was always beyond their real economic position.
But Greece does want to remain within the Eurozone, 70% or so of Greeks want to keep the euro, maybe because they have recent experience of a devalued and unstable currency and don't want to go back there.Greece wishes to remain within the EU but the EU are not as yet prepared to accept the terms Greece has proposed of writing off the Greek debt or certainly a substantial part of this debt. I do not think the EU will accept this at all because of the knock on effect on the other, failing, watching sovereign states. Therefore Greece may and indeed is on the face of it, seeking to remain within the EU. But without economic recovery.
I do not think that is actually a practical plan. Unsurprising really since the new Greek government is ultra left wing we should expect no more. Socialist depend upon massive public over borrowing and overspending to grow their own personal wealth and status as demonstrated by Blair and Brown in their many years of UK economy destruction.
Tragically I think the Greek government will fail in their efforts. Their approach is opnely two faced. Therefore default is inevitable. Time will tell, but I cannot see any sign or signal that Greece can actually afford remain within the EU.
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