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

[Steffan]

TA14 said:

Steffan said:

only push the problem away for literally weeks at best.

This is the bit that I struggle with. Greece recently had to effectively borrow from the IMF to make a payment to the IMF. Even if they agree a deal with the EU to release the remaining E7bn, they still need to pay E17bn in the next twelve weeks but they don't appear to have any money http://www.bbc.co.uk/news/business-32970661

I entirely agree. There is no realistic basis for believing that Greece will ever recover economically. Five years of this nonsense by the EU has established that. Whatever efforts the EU try to find to keep Greece within the EU and Euro unless permanent and continuous non returnable subsidy is agreed for Greece then Greece must fall out of this club. I can well understand that the EU do not want Greece or indeed any other country to leave. But as ever in politics, the events have overtaken the politicians in this nonsense.

Just a few of today's headlines on this subject:

http://www.bbc.co.uk/news/blogs-eu-32959048

http://www.bbc.co.uk/news/business-32852468

http://www.bbc.co.uk/news/business-32970661

Edited by Steffan on Tuesday 2nd June 13:48

[Mermaid]

Draghi says Greek economy is viable with right policies.........

Only the Greeks do not know that

[Andy Zarse]

Mermaid said:

Draghi says Greek economy is viable with right policies.........

Only the Greeks do not know that

The right policy being to default and devalue? Err...


A topical article from Shaun Richards today.

https://notayesmanseconomics.wordpress.com/2015/06...

hands up who knew this:

The European Financial Stability Facility (EFSF) placed today a €4 billion 30-year bond maturing on 29 July 2044

So the much-vaunted EU rescue mechanism is raising capital on the markets, and the three to four year PIIGS bailout programmes, as originally imagined, have been extended a further 30 years. Official confirmation of failure I'd say.

[anonymous-user]

Andy Zarse said:

hands up who knew this:

The European Financial Stability Facility (EFSF) placed today a €4 billion 30-year bond maturing on 29 July 2044

I did not know this. Eurobonds anyone?

[GlenMH]

4Bn doesn't seem like much to me. Were they just testing the market appetite? Or hoping Frau Merkel wouldn't notice?

[Andy Zarse]

fblm said:

Andy Zarse said:

hands up who knew this:

The European Financial Stability Facility (EFSF) placed today a €4 billion 30-year bond maturing on 29 July 2044

I did not know this. Eurobonds anyone?

What I'd like to know is, what happens when the PIIGS default? Where will the ESFS get the EU500BN from to pay the yield to maturity and the redemption? I suppose 30 years is a very long drop kick of the poor battered proverbial can, but are they assuming the public are too stupid to realise Merkel and pals have spunked half a trill up the wall?

[Steffan]

Andy Zarse said:

Mermaid said:

Draghi says Greek economy is viable with right policies.........

Only the Greeks do not know that

The right policy being to default and devalue? Err...


A topical article from Shaun Richards today.

https://notayesmanseconomics.wordpress.com/2015/06...

hands up who knew this:

The European Financial Stability Facility (EFSF) placed today a €4 billion 30-year bond maturing on 29 July 2044

So the much-vaunted EU rescue mechanism is raising capital on the markets, and the three to four year PIIGS bailout programmes, as originally imagined, have been extended a further 30 years. Official confirmation of failure I'd say.

Excellent posts from Mermaid and Andy Zarse both absolutely on the button.

Greece has steadfastly failed to undertake the necessary economic structural changes that the reality of the whole scale insolvency of Greece requires for any recovery to begin to have an effect. The policies of the successive Greek governments over the last five years have resulted in greater insolvency and massively increasing unaffordable debts for Greece. The EU has gambled on Greece actually undertaking the nesseray reforms. The EU has lost that gamble. That may be unpalatable but it is an undeniable fact. In consequence any further monies lent to Greece really is an act of desperation, because the money is never coming back. As these posts confirm in reality there is no hope of any recovery in Greece. Pipe dreams make for very bad lending.

Given that Syriza are not prepared to give up the dotty socialist approach to managing the economy of Greeece where spend, spend, spend is seen as the answer, there is no realistic prospect of any recovery in Greece. The EU could push this further on by agreeing yet more loans (in reality outright gifts) to Greece but their credibility would be in tatters. That must surely be their concern now? The longer this goes on the more difficulty the EU are building up for themselves. The consequences of the Greek default will be serious enough in itself for the EU to manage. Adding to the problem by knowingly continuing to lend good money after bad can only make matters worse. Time for a reality check at the EU I suggest.

[anonymous-user]

Andy Zarse said:

...are they assuming the public are too stupid...

I think they are assuming that they will have almost lived out their extremely comfortable retirements by then and that the vast majority of the public either doesn't care about, doesn't understand or can do nothing about their machinations.

[Enricogto]

Gargamel said:

What would make Italy or Portugal want to carry on paying back there bailouts (or Ireland for that matter)

Italy has never been bailed out. The only two countries who had access to the ESM ate Cyprus (1.5 bn) and Spain (41 bn). Furthermore official data published today confirmed unemployment down to 12.5% (still high ofc) and positive data on manufacturing confidence index.

[Gargamel]

Enricogto said:

Italy has never been bailed out. The only two countries who had access to the ESM ate Cyprus (1.5 bn) and Spain (41 bn). Furthermore official data published today confirmed unemployment down to 12.5% (still high ofc) and positive data on manufacturing confidence index.

Come off it, this is a figleaf on an otherwise nude figure. Sure the technical "bailout" wasn't triggered, but the ESM bought Italian bonds all the same, and artificially through direct intervention lower the effective bond rate.

The EU replaced the Italy democratically elected Government just to get a deal through.

All that aside, I have always believed Italy had its destiny in its own hands, since its Northern areas is a proper functioning hard working industrial economy, and it drags the South along just about OK.

With a bit of labour market reform, Italy could be a very successful economy. Their brands and quality of luxury items are really remarkable.

[Andy Zarse]

Enricogto said:

Gargamel said:

What would make Italy or Portugal want to carry on paying back there bailouts (or Ireland for that matter)

Italy has never been bailed out. The only two countries who had access to the ESM ate Cyprus (1.5 bn) and Spain (41 bn). Furthermore official data published today confirmed unemployment down to 12.5% (still high ofc) and positive data on manufacturing confidence index.

Yes, the others accessed bail out billions via the ESFS not the ESM. Do you consider this is an important difference?

Italy did badly in the supposedly good times. Do you think they'd be better of out of my the EZ?

[maffski]

GlenMH said:

4Bn doesn't seem like much to me. Were they just testing the market appetite? Or hoping Frau Merkel wouldn't notice?

Or they just hope to drip feed to out, little and often so it gets hidden by all the other numbers.

[Steffan]

fblm said:

Andy Zarse said:

hands up who knew this:

The European Financial Stability Facility (EFSF) placed today a €4 billion 30-year bond maturing on 29 July 2044

I did not know this. Eurobonds anyone?

Nor, indeed, did I. I suspect that this fact is not widely known which is the deliberate policy of the EU, seeking to dribble out suspect securities and hope no one notices and they get away with it. Which it would appear they have. At the moment. How ever when the Greek chickens come home to roost and the markets realise how wrong the EU have been in their hopeless mismanagement of this affair there will be serious consequences.

[Steffan]

Just spotted an article in the Beeb by R. Peston concerning the lack of realism in this current nonsense. I realise RP is not everyone's cup of tea but I think he is right on this point. Whatever "deal" the EU can cook up with regard to keeping Greece afloat temporarily the visible reality is that this is not a sustainable position.

As Peston says fifty years of austerity,which is the kind of period that the repayment of the loans made to Greece, would require, were Greece to actually attempt to make the payments, is simply not a reasonable expectation. Five years of massive loans to Greece from the EU, with Greece requiring constant further loans to make the due repayments on the loans, have confirmed that this "Solution" has not worked and regrettably will not work.

The EU may raise expensive smokescreens by throwing yet more Billions of Euros away in supporting Greece. But by any sensible ssassement of the reality of the size of the loans to Greece, and the hopless unaffordable of repayment by Greece has reached the point of sheer stupidity.

Were it not for the awful tragedy that this represents to the entire Greek population then Greece defaulting could almost seem inevitable and therefore, somehow, acceptable. However the human cost of the consequences of collapse will last for generations in Greece itself, and this must now be the concern of the EU. In a economic union of Sovereign states, where individual states can only remain within that union, providing their economies can actually afford the cost and cross state subsidy is not acceotanpble then separation from the union must follow insolvency. At a human level I would hope that some method of limiting the consequences to tyhe Greek people can be found. But blindly continuing to throw weekly billions to an insolvent country and pretending that it will all be repaid in full with interest is simply not sound economics.

Time for the EU to face reality.

[slow_poke]

Greece again. Greece Greece Greece. Greece this, Greece that, Greece the other. Three bags full Greece.

Look, I think we're all agreed that Greece is a basket case, that it's going to fail, and its failure doesn't mean the end of the Euro.

Goodbye and good luck to Greece. Can we all stop harping on abouot pook old Greece and please find some other proof for/against the topic:

Is the end nigh for the Euro? (Greece excluded).

Now, what's next or what's left that'll doom the euro? The last page was developing nicely there with talk of Eurobonds and Italy, till bloody Greece stuck its head up above the parapet again.

[steveT350C]

The end is nigh for the Euro if the EU loses it's power.

The Danish 'right' demand European Referendum. The Danish are quietly very pro UK.

'The Danish People’s Party, which is expected to hold the balance of power after next month’s general election, is calling for a referendum on Denmark’s membership of the EU. Party leader Kristian Thulesen Dahl said his aims for reform were similar to those of David Cameron.'

http://t.co/kE4nA0pVsZ

Grexit should be inevitable, Brexit 50/50, but getting more likely, and would be catastrophic for the EU.

The Euro is one part of the EU's political construct that, by hook or crook, is ruining millions of people's livelihoods.

Edited by steveT350C on Wednesday 3rd June 20:30

[slow_poke]

steveT350C said:

The end is nigh for the Euro if the EU loses it's power.

The Danish 'right' demand European Referendum. The Danish are quietly very pro UK.

'The Danish People’s Party, which is expected to hold the balance of power after next month’s general election, is calling for a referendum on Denmark’s membership of the EU. Party leader Kristian Thulesen Dahl said his aims for reform were similar to those of David Cameron.'

http://t.co/kE4nA0pVsZ

Grexit should be inevitable, Brexit 50/50, but getting more likely, and would be catastrophic for the EU.

The Euro is one part of the EU's political construct that, by hook or crook, is ruining millions of people's livelihoods.

Edited by steveT350C on Wednesday 3rd June 20:30

I'm all for the bigger picture steve, but I think your canvass is overlarge for this topic.

Neither the UK nor Denmark are part of the Euro, are they? Could the EU (and therefore the Euro) survive a Grexit and a Brexit along with the Danes getting sulky too?

[Andy Zarse]

slow_poke said:

Greece again. Greece Greece Greece. Greece this, Greece that, Greece the other. Three bags full Greece.

Look, I think we're all agreed that Greece is a basket case, that it's going to fail, and its failure doesn't mean the end of the Euro.

Goodbye and good luck to Greece. Can we all stop harping on abouot pook old Greece and please find some other proof for/against the topic:

Is the end nigh for the Euro? (Greece excluded).

Now, what's next or what's left that'll doom the euro? The last page was developing nicely there with talk of Eurobonds and Italy, till bloody Greece stuck its head up above the parapet again.

I'm assuming you missed four posts above about the EFSF issuing 4 billion in 30 year bonds? If so, put some glasses on.

[slow_poke]

Andy Zarse said:

slow_poke said:

Greece again. Greece Greece Greece. Greece this, Greece that, Greece the other. Three bags full Greece.

Look, I think we're all agreed that Greece is a basket case, that it's going to fail, and its failure doesn't mean the end of the Euro.

Goodbye and good luck to Greece. Can we all stop harping on abouot pook old Greece and please find some other proof for/against the topic:

Is the end nigh for the Euro? (Greece excluded).

Now, what's next or what's left that'll doom the euro? The last page was developing nicely there with talk of Eurobonds and Italy, till bloody Greece stuck its head up above the parapet again.

I'm assuming you missed four posts above about the EFSF issuing 4 billion in 30 year bonds? If so, put some glasses on.

Good onya Andy, that reminds me to get onto HR for an annual eyecare voucher.

Oh, did you notice the bit (I've put it in boldface now) where I mentioned talk of Eurobonds? I'll see if I can blag a spare voucher out of HR for you.

[Enricogto]

Andy Zarse said:

Enricogto said:

Gargamel said:

What would make Italy or Portugal want to carry on paying back there bailouts (or Ireland for that matter)

Italy has never been bailed out. The only two countries who had access to the ESM ate Cyprus (1.5 bn) and Spain (41 bn). Furthermore official data published today confirmed unemployment down to 12.5% (still high ofc) and positive data on manufacturing confidence index.

Yes, the others accessed bail out billions via the ESFS not the ESM. Do you consider this is an important difference?

Italy did badly in the supposedly good times. Do you think they'd be better of out of my the EZ?

Both EFSF and ESM. As per the LTRO, all countries' bond were part of the purchase program, so technically you could say all countries have been bailed out.
Indeed did less well than others during supposedly good times, but one good thing this crisis has brought is a reform of the employment law (hence my comment on reduced unemployment) and a reduced power of the unions.
As per the replaced government....nothing to say!