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

[tumble dryer]

Andy Zarse said:

No you're quite right, so don't do yourself down; you definitely "get it".

The only thing I'd query is inviting Vlad for dinner. Not a good idea just now. The problem is he'll turn up, eat all the food then refuse to pay. "Sorry left my wallet at home, frightfully embarrassing old boy, I'm a bit short himself at the moment" etc. That kind of thing.

Also this will ps off Uncle Sam, and doing that never really got people anywhere.

Pi$$ off Uncle Sam, Feck me, I'd do that with zero provocation!

But I take your point(ish).

This whole thing scares me a bit (remember I'm an old git). I genuinely and honestly think that of all the troubles facing us (it's probably unfair to say The Western World, but equally, IMO accurate) the EU breakup, staring us right in the face - domino effect - as far as ordinary people are concerned, insidiously, presents us with a grenade minus pin.

I'd still invite Vlad for dinner tho', if only to strengthen my hand against the beurocrat feckers.

Thanks for the reply.


TD

ETA Tick-tock, with time running out.

[Walford]

[RYH64E]

GThere's an interesting quote in the Telegraph from the Greek Finance Minister, Yaris Varoufakis, who compared his country to a jobless worker with a mortgage,"Would you give him another loan so that he can make payments on his house? That cannot work. I'm the Finance Minister of a bankrupt country." Which is all perfectly true, but inconsistent with their pre-election pledge to reject austerity. In reality, a jobless man with a mortgage has a very bleak future unless he gets another job very quickly, his house will be repossessed and his assets sold to pay off his creditors.

I get the bankrupt bit, and the futility of more loans, I just can't see the route to 'reject austerity', and that's the reason Greece voted for Syriza in the first place.

Edited by RYH64E on Thursday 5th February 07:24

[Andy Zarse]

It's a neat analogy and sums things up for a layman. As to "austerity" economies aren't really like households. In good times they need cooling down and in bad times they need a bit of stimulation (don't we all). The problem with the tightening undertaken in Greece is that it has lead to further economic contraction to the point of a deadly debt deflation spiral. In effect, it has made the situation worse, not better. The tightening has been far too tight, and much of it has been inspired by the Germans to punish the Greeks for past sins. It's been completely self-defeating.

[cardigankid]

tumble dryer said:

Personally I'd stop the Round the World tour and invite Vlad for dinner.

There are levers being applied that, to me, are utterly disgraceful. The EU knew exactly what they were getting when Greece was invited to join the EU; just the same as when banks extend credit knowing that they'll likely pick up the assets in a fire sale a few years down the road.

I agree - desperate situations call for desperate measures, and if the EU feels at liberty to mow Russia's lawn, I see no reason why Russia shouldn't do the same to them. The EU knew exactly what they were doing when they invited Greece to join, and Germany has benefitted massively from that. They handed them the money to waste. The proposition of expecting the Greeks to behave like Germans is a load of disingenuous nonsense.

I remain of the view that if Syriza tough it out they will get an acceptable package from the EU. Some commmon sense short of total austerity will be required and they will probably be up for that. Germany cannot afford the break up of the Euro.

[QuantumTokoloshi]

I am beginning to like this new Greek finance minister.

http://www.zerohedge.com/news/2015-02-04/president...

[RYH64E]

Andy Zarse said:

It's a neat analogy and sums things up for a layman. As to "austerity" economies aren't really like households. In good times they need cooling down and in bad times they need a bit of stimulation (don't we all). The problem with the tightening undertaken in Greece is that it has lead to further economic contraction to the point of a deadly debt deflation spiral. In effect, it has made the situation worse, not better. The tightening has been far too tight, and much of it has been inspired by the Germans to punish the Greeks for past sins. It's been completely self-defeating.

What unilateral options does Greece have? The UK, USA and EU have the benefit of established currencies and developed economies that has allowed them to borrow/print/create money and run a deficit for a bit of stimulation. If Greece renounces their debts and leaves the EU then they're on their own, with a completely new and untrusted currency and little if any ability to borrow more money on the international markets. Where does their short term stimulation come from?

Whether or not their long term prospects would be better out of the EU, somehow they've got to manage the transition from where they are to where they want to be, and I just don't see it happening. Their best bet imo is to be a bit more conciliatory towards Germany in particular, and try to get a better deal, and more support as opposed to loans, from the EU. I'm not sure that's something that Syriza will be willing, or able, to do, and with their past track record there's little reason why anyone in the EU would trust them enough to throw more money in their direction.

[turbobloke]

RYH64E said:

Andy Zarse said:

It's a neat analogy and sums things up for a layman. As to "austerity" economies aren't really like households. In good times they need cooling down and in bad times they need a bit of stimulation (don't we all). The problem with the tightening undertaken in Greece is that it has lead to further economic contraction to the point of a deadly debt deflation spiral. In effect, it has made the situation worse, not better. The tightening has been far too tight, and much of it has been inspired by the Germans to punish the Greeks for past sins. It's been completely self-defeating.

What unilateral options does Greece have? The UK, USA and EU have the benefit of established currencies and developed economies that has allowed them to borrow/print/create money...

That's not the key criterion by which a country can print money (or move interest rates) which is.....

[RYH64E]

turbobloke said:

That's not the key criterion by which a country can print money (or move interest rates) which is.....

Greece could print as many New Drachma as it wanted, after all it's only ink on paper, but adding extra zeros to the number on a bit of paper doesn't increase the value of the currency in circulation. If only it were that easy...

[Andy Zarse]

RYH64E said:

Andy Zarse said:

It's a neat analogy and sums things up for a layman. As to "austerity" economies aren't really like households. In good times they need cooling down and in bad times they need a bit of stimulation (don't we all). The problem with the tightening undertaken in Greece is that it has lead to further economic contraction to the point of a deadly debt deflation spiral. In effect, it has made the situation worse, not better. The tightening has been far too tight, and much of it has been inspired by the Germans to punish the Greeks for past sins. It's been completely self-defeating.

What unilateral options does Greece have? The UK, USA and EU have the benefit of established currencies and developed economies that has allowed them to borrow/print/create money and run a deficit for a bit of stimulation. If Greece renounces their debts and leaves the EU then they're on their own, with a completely new and untrusted currency and little if any ability to borrow more money on the international markets. Where does their short term stimulation come from?

Whether or not their long term prospects would be better out of the EU, somehow they've got to manage the transition from where they are to where they want to be, and I just don't see it happening. Their best bet imo is to be a bit more conciliatory towards Germany in particular, and try to get a better deal, and more support as opposed to loans, from the EU. I'm not sure that's something that Syriza will be willing, or able, to do, and with their past track record there's little reason why anyone in the EU would trust them enough to throw more money in their direction.

Again I don't disagree. It's one of those "I wouldn't start from here" things.

I go back to the original point that an orderly default/devaluation five years ago would have been the best thing for. Trouble is, the damage has been inflicted with no gains and yet they're still worshipping a false god called the Euro. I honestly have no idea what they can do except to say if they keep doing the same thing they'll keep getting the same result. Maybe a dose of complete chaos is actually the answer, at least it would shuffle the cards around.

[RYH64E]

Andy Zarse said:

Maybe a dose of complete chaos is actually the answer, at least it would shuffle the cards around.

You might be right, I certainly don't see any easy solutions other than ongoing support and subsidy from the rest of the EU, but unfortunately for Syriza their election manifesto didn't promise chaos and a fresh start, it promised a rejection of austerity, and that's what they're expected to deliver.

To go back to the jobless man with a mortgage analogy, what response would he expect from the Building Society/Job Centre when he tells them he's got no job, can't afford to pay his debts, but he's not prepared to put up with any of this austerity nonsense? A fresh start might be the best option for him as well, but there will be tough times ahead.

[turbobloke]

RYH64E said:

turbobloke said:

That's not the key criterion by which a country can print money (or move interest rates) which is.....

Greece could print as many New Drachma as it wanted, after all it's only ink on paper, but adding extra zeros to the number on a bit of paper doesn't increase the value of the currency in circulation. If only it were that easy...

They've left the EZ then, woohoo or omigawd

And the EU?!

[Merp]

It looks like ive got alot of reading to do.
I'm planning on transferring alot of money from the Austrian account back to the UK.
Its fairly new to me, and i really dont want to lose out on bank exchange rates.
Fuel is 1.05euros per litre here though - so ive got that going for me!

[Andy Zarse]

Merp said:

It looks like ive got alot of reading to do.
I'm planning on transferring alot of money from the Austrian account back to the UK.
Its fairly new to me, and i really dont want to lose out on bank exchange rates.
Fuel is 1.05euros per litre here though - so ive got that going for me!

We regularly transfer Euros to GBP, let me know and I can put you in touch with the FX firm we use. It's far cheaper than going through the bank, who will probably tuck you up like a kipper!

[RYH64E]

Andy Zarse said:

Merp said:

It looks like ive got alot of reading to do.
I'm planning on transferring alot of money from the Austrian account back to the UK.
Its fairly new to me, and i really dont want to lose out on bank exchange rates.
Fuel is 1.05euros per litre here though - so ive got that going for me!

We regularly transfer Euros to GBP, let me know and I can put you in touch with the FX firm we use. It's far cheaper than going through the bank, who will probably tuck you up like a kipper!

Bit of a judgement call as to whether now is a good time to be moving euro into Sterling, my interest is more GBP/USD but I always seem to get the timing wrong on any currency deals. For what it's worth, I use AFEX.

[Andy Zarse]

RYH64E said:

Andy Zarse said:

Merp said:

It looks like ive got alot of reading to do.
I'm planning on transferring alot of money from the Austrian account back to the UK.
Its fairly new to me, and i really dont want to lose out on bank exchange rates.
Fuel is 1.05euros per litre here though - so ive got that going for me!

We regularly transfer Euros to GBP, let me know and I can put you in touch with the FX firm we use. It's far cheaper than going through the bank, who will probably tuck you up like a kipper!

Bit of a judgement call as to whether now is a good time to be moving euro into Sterling, my interest is more GBP/USD but I always seem to get the timing wrong on any currency deals. For what it's worth, I use AFEX.

Me too, rubbish at it. Had to move some Euros last week to pay the tax bill... what an utter disaster that was, it was the equivalent of having Labour setting the tax rates

PS we use TORfx, they're very efficient.

[Borghetto]

I'm waiting with bated breath to hear what Schäuble has to say. This could be a huge bucket of cold water on Greece's plans.

[EskimoArapaho]

It seems that the cool-as-tzatziki Varoufakis, may have miscalculated.

Someone digging into his old Twitterings found this: https://twitter.com/yanisvaroufakis/status/1706550...

[LongQ]

An interesting (but logical) opening gambit from the Greeks ahead of the Schauble meeting.

"Don't humiliate us and remember what Germany was like after WW1 ..."

http://www.bbc.co.uk/news/world-europe-31147112


Plus apparently 17 recently elected Right Wing politicians have had to be released from custody so they can be sworn in to the new Greek Parliament as part of the coalition government's majority.

Interesting times. I'll bet the EU does not have a pre-pack strategy to cover that!

[turbobloke]

LongQ said:

I'll bet the EU does not have a pre-pack strategy to cover that!

Not sure about that!

make up new rule(s) as required --> break old and new rule(s) as required --> issue statement full of chutzpah but otherwise empty