Is the end nigh for the Euro? [vol. 3]
Discussion
RYH64E said:
What the Greek people are experiencing at the moment is a foretaste of life outside the EZ, the ECB have largely withdrawn support following the breakdown of negotiations so they are only on the fringes of the EZ at present. Depending how the referendum goes this weekend Greece could either find themselves back at the negotiating table, ECB support restored, banks open, or back to the Drachma, banks closed, businesses going bust in droves. I would be amazed if the people of Greece take the risky option of going it alone, regardless of the long term prospects the immediate future would be grim.
So, they either choose a leap into the unknown, or death by a thousand cuts. A terrible situation to be in. However, this situation was created solely by membership of the Euro. I believe that the Greeks will choose to stay. Of course, the referendum result is utterly irrelevant. Economics will decide what happens to Greece. Not some cross on a piece of paper.
What price European democracy?
AJS- said:
I think that will depend who X, Y and Z are. A lot of the Greek tragedy so far has bailed out the likes of BNP Paribas and others.
In my post, X Y and Z represented the various sources of billions that can keep Greece staggering along: IMF, EFSF, Wonga, etc.Banks - yes nobody has forgotten them, I suspect.
"What the Greek people are experiencing at the moment is a foretaste of life outside the EZ" isn't quite right.
It won't be instant nirvana far from it but outside the EZ there are more options for Greece to select from when navigating their recovery.
Iceland told creditors to take a hike in 2008. They also imposed capital controls and allowed the value of their currency to fall, because they could.
The krona lost ~half of its value against the euro in five years.
Experts said that Iceland would be punished as a persona non grata with the international financial markets.
Yet it was rehabilitated and sold $1bn of 10-year bonds to investors in 2012.
"eaten olives are soon forgotten"
It won't be instant nirvana far from it but outside the EZ there are more options for Greece to select from when navigating their recovery.
Iceland told creditors to take a hike in 2008. They also imposed capital controls and allowed the value of their currency to fall, because they could.
The krona lost ~half of its value against the euro in five years.
Experts said that Iceland would be punished as a persona non grata with the international financial markets.
Yet it was rehabilitated and sold $1bn of 10-year bonds to investors in 2012.
"eaten olives are soon forgotten"
anonymous said:
[redacted]
All true, but you can't have a bad borrower without a bad lender. And it wasn't just Greece who fiddled the figures to admit Greece to the single currency. The other members or the EU themselves could have stopped this simply by enforcing their own rules.The question is what is the best way forward? Keeping the country in constant economic stagnation for the sake of preserving the single currency is destructive to everyone involved.
Well over the years on this thread, lots of people have a various times been quite determined that Greece would never be allowed to default. Or have stated that default within the Eurozone can't happen as eventually the wise master in Brussels will fix everything via "more Europe" or money transfers or debt relief or the ESM or QE or any of the other ways they could have socialised the Greek debt.
However in my view Syriza have played a spectacularly bad hand, failing to realise that personal relationships at the top level are critical. They have just annoyed the people with the power to help.
Just consider, at one point Germany was advising them to hold a referendum. Which was rejected, three weeks later in a total surprise to everyone, the Greeks announce a referendum for after the deadlines. Merkel must have been absolutely spitting.
Blib said:
However, this situation was created solely by membership of the Euro.
Not so, this situation was created the failure of Greece to run a modern, efficient economy. Regardless of whether they stay in the EZ or revert to the Drachma, they are going to have to change their ways and accept that they can't afford for hairdressers to retire at 50 on a full pension etc. Greece hasn't been successful since someone applied for planning permission to build the Parthenon... Why would this change simply by reverting to the Drachma?
It's funny you say that but my impression is that they want to stall and squirm and string it out as much as possible with the express reason of of pissing off Europre. I reckon they've had enough of all the bulls
t deficit and being treated as second class citizens and they want out without having to back yet another enormous sum of money.
Could Syriza be more cunning than we thought?
At any rate, big can or not, it's not going to make damn bit of difference to the Eu, it will just continue as the Eu minus Greece and Greece can only benefit in the long term surely?
t deficit and being treated as second class citizens and they want out without having to back yet another enormous sum of money.Could Syriza be more cunning than we thought?
At any rate, big can or not, it's not going to make damn bit of difference to the Eu, it will just continue as the Eu minus Greece and Greece can only benefit in the long term surely?
Edited by Driller on Wednesday 1st July 08:42
RYH64E said:
Blib said:
However, this situation was created solely by membership of the Euro.
Not so, this situation was created the failure of Greece to run a modern, efficient economy. Regardless of whether they stay in the EZ or revert to the Drachma, they are going to have to change their ways and accept that they can't afford for hairdressers to retire at 50 on a full pension etc. Greece hasn't been successful since someone applied for planning permission to build the Parthenon... Why would this change simply by reverting to the Drachma?
How can you gainsay that and keep a straight face?
Where did I mention that Greece would be an economic powerhouse otherwise?
turbobloke said:
Iceland told creditors to take a hike in 2008. They also imposed capital controls and allowed the value of their currency to fall, because they could.
The krona lost ~half of its value against the euro in five years.
Iceland had a currency to devalue, Greece doesn't. How long will it take to establish a fully functioning, internationally tradeable Drachma? And what will happen to Greece in the meantime? How long can Greece survive as a country without access to a functioning banking system?The krona lost ~half of its value against the euro in five years.
Whether or not Greece should ever have adopted the euro is a moot point, the question is what should they do now, starting from a point where their currency is the euro?
RYH64E said:
Blib said:
However, this situation was created solely by membership of the Euro.
Not so, this situation was created the failure of Greece to run a modern, efficient economy. Regardless of whether they stay in the EZ or revert to the Drachma, they are going to have to change their ways and accept that they can't afford for hairdressers to retire at 50 on a full pension etc. Greece hasn't been successful since someone applied for planning permission to build the Parthenon... Why would this change simply by reverting to the Drachma?
We all know that Greece fibbed a bit in its application and that eurocrats looked the other way for reasons of self-interest, not the interests of Greece. Who could point a finger at Greece without another finger being put to use.
At this point, which is what matters, the dire situation of Greece isn't within Greece's control as they've surrendered too muich autonomy to the EZ/EU and the latter won't act in the interests of Greece now any more than they did when looking the other way.
RYH64E said:
turbobloke said:
Iceland told creditors to take a hike in 2008. They also imposed capital controls and allowed the value of their currency to fall, because they could.
The krona lost ~half of its value against the euro in five years.
Iceland had a currency to devalue, Greece doesn't.The krona lost ~half of its value against the euro in five years.
RYH64E said:
How long will it take to establish a fully functioning, internationally tradeable Drachma?
How long has Greece already been hammered by the EZ/EU cosh?RYH64E said:
And what will happen to Greece in the meantime?
What's happening now is just peachy, and no end in sight.RYH64E said:
How long can Greece survive as a country without access to a functioning banking system?
Iceland's banks functioned well? Look now.RYH64E said:
Whether or not Greece should ever have adopted the euro is a moot point, the question is what should they do now, starting from a point where their currency is the euro?
Excactly 
turbobloke said:
RYH64E said:
Whether or not Greece should ever have adopted the euro is a moot point, the question is what should they do now, starting from a point where their currency is the euro?
Excactly You talk about the Icelandic option as if it's a viable alternative, but it isn't. Rightly or wrongly, for whatever reason, Greece does not have a currency in place to revert to, the infrastructure isn't there, it doesn't exist and can't be created overnight. Whether they should have adopted the euro in the first place is completely irelevant to the question of what they should do now.
There's no reason a currency can't be introduced - if not overnight - very quickly. They were minting their own currency 15 years ago and many of the notes and coins will still be in existence. Producing more is not hard.
What it would take is a Greek government with the backbone to say to both the EU and it's own people that this is what we're doing, and the short-term pain is necessary for the long-term good of the country. They would then have a very tough few years where they couldn't borrow money and they would have to have higher interest rates and low inflation to keep capital in the country and build up some semblance of credibility.
It will mean a big pay cut, fewer BMWs, and a Greek state pension paid in Drachmas won't take you very far outside Greece.
All a bit academic though as Greece has no such government nor opposition.
What it would take is a Greek government with the backbone to say to both the EU and it's own people that this is what we're doing, and the short-term pain is necessary for the long-term good of the country. They would then have a very tough few years where they couldn't borrow money and they would have to have higher interest rates and low inflation to keep capital in the country and build up some semblance of credibility.
It will mean a big pay cut, fewer BMWs, and a Greek state pension paid in Drachmas won't take you very far outside Greece.
All a bit academic though as Greece has no such government nor opposition.
Blib said:
Article said:
Haris Theoharis, a politician in the centrist party To Potami, said: "There's already a team within the prime minister's office, with staff from the general accounting office, right now working on the drachma."
AJS- said:
It's a full on collapse at the moment, and horrendous for the people living there.
What I meant was that leaving the Euro and issuing Drachma, the only real way out of this mess, would be far more of a disaster for the Euro-enthusiasts than it would for the Greek people. It would mean a few difficult years, but it would allow them to start rebuilding.
It would be a real disaster if after a few years things aren't looking so bad and tourism is booming...What I meant was that leaving the Euro and issuing Drachma, the only real way out of this mess, would be far more of a disaster for the Euro-enthusiasts than it would for the Greek people. It would mean a few difficult years, but it would allow them to start rebuilding.
Driller said:
It's funny you say that but my impression is that they want to stall and squirm and string it out as much as possible with the express reason of of pissing off Europre. I reckon they've had enough of all the bullst deficit and being treated as second class citizens and they want out without having to back yet another enormous sum of money.
Could Syriza be more cunning than we thought?
At any rate, big can or not, it's not going to make damn bit of difference to the Eu, it will just continue as the Eu minus Greece and Greece can only benefit in the long term surely?
How are they treated as second class citizens?t deficit and being treated as second class citizens and they want out without having to back yet another enormous sum of money.Could Syriza be more cunning than we thought?
At any rate, big can or not, it's not going to make damn bit of difference to the Eu, it will just continue as the Eu minus Greece and Greece can only benefit in the long term surely?
Edited by Driller on Wednesday 1st July 08:42
The fact is Greece has to impose public service cuts, they have to make people work until there older to make the savings and they refuse.
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