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

[Steffan]

Mermaid said:

Gargamel said:

Initially you would expect the euro to decline and the pound to strengthen. But provided no banks in Eurozone collapse and that it is managed relatively efficiently I would expect the Euro to rise as it would be stronger without Greece in it.

However, QE installments in the Euro zone are probably a more influential factor for actual currency value, the Greek thing is more sentiment.

I suppose so much is factored in already, and a relief rally likely after the initial reaction.

Interesting to hear your views on the extent to which the drop is likey to have been already factored in, by anticipation. As Gargamel rightly says the likely result is decline of the Euro followed by a recovery because as he says the Euro will be stronger without Greece.

I have deeply serious concers about the excessive use of QE as an economic wheel greaser and I think that the EU and ECB are playing a very tricky game herein consequence. To my mind QE should only be used to create long term infrastructure project of real worth and lasting value from which a substantial return can be returned over the years. Excessive use of QE should be avoided, because of the possible downside economic effects.

[PRTVR]

Has a country ever come out of a monetary union like this before ?
I think it will be very problematic, will Greek Euros still be a currency the day that they decide to change to the drachma? if not what of the notes that are in other countries, will Greece still be able to deal in Euros,if so what is to stop them still using the euro, until all the problems are sorted will not the currency markets be volatile.

[s2art]

PRTVR said:

Has a country ever come out of a monetary union like this before ?

Well, not sure how previous monetary unions compare. We have a pretty good example with the old sterling zone. Many countries came out of that without any problems.

[Welshbeef]

PRTVR said:

Has a country ever come out of a monetary union like this before ?
I think it will be very problematic, will Greek Euros still be a currency the day that they decide to change to the drachma? if not what of the notes that are in other countries, will Greece still be able to deal in Euros,if so what is to stop them still using the euro, until all the problems are sorted will not the currency markets be volatile.

Anyone can use the € just like anyone can use the £. Issues though are significant

[Steffan]

Welshbeef said:

PRTVR said:

Has a country ever come out of a monetary union like this before ?
I think it will be very problematic, will Greek Euros still be a currency the day that they decide to change to the drachma? if not what of the notes that are in other countries, will Greece still be able to deal in Euros,if so what is to stop them still using the euro, until all the problems are sorted will not the currency markets be volatile.

Anyone can use the € just like anyone can use the £. Issues though are significant

I agree with you, Welshbeef, the issues are going to be significant. PRTVR ask some very interesting questions. On the assumption that Greece would act lawfully if default occurs then fom that point I think Greece could no longer use the currency they have defaulted from. However the Greeks may not share that view. I think an outright default by Greece would create serious problems for the EU.

Particularly, in terms of credibility in having mistakenly allowed this position to develop into an unsupportabe mess whilst regularly prounouncing that the "Solution" was going to solve all the prolbems. Which it dd not. Therefore the serious question will arise concerning the inability of the EU to satisfy the doubts of the markets. If the EU actually had control over this nonsense then why are we here? If the EU had control then why is Greece in the pickle it is in? Begs that questioning I think? Markets dislike uncertainty. It seems clear to me that uncertainty is going to be a real challenge for the EU once this blows up. Very, very challenging I think.

The latest article on the Beeb suggests that Germany is getting very concerned. Coud well be an attempt to bounce Greece into further concesions in an attempt to remain within the EU. To my mind that time is passing in any event because of the shortess of time left for a solution to be found?

see: http://www.bbc.co.uk/news/business-33125801

The longer this nonsense goes on the smaller the chance of the EU managing to keep Greece within the union IMO. Time will tell.

[gruffalo]

http://www.bbc.co.uk/news/business-33132591

The Beeb reporting that the talk yesterday lasted a whole 45 minutes, doesn't sound like compromise is agreeable to either side.

The article also starts to talk about a messy Greek exit in 2 weeks time.

I actually hope the Greeks do see sense and exit, it will be painful but I am convinced it will be only way they can recover from this, default and rebuild.

What will happen to the Euro?

[Gargamel]

EU issues Greek Citizen To Do list.

• Placed order for tins of corned beef
• Confirm spare batteries for the torch
• Moved all cash into secure mattress shaped deposit account

Tin hats on everyone ... this one is going right to wire.

[spikeyhead]

First slowly, then quickly. ...

Is this the start of the quick phase?

[Gargamel]

spikeyhead said:

First slowly, then quickly. ...

Is this the start of the quick phase?

Hard to tell isn't it. Is it brinkmanship, nothcing up the pressure or a sincere warning.

Think the fact the the meeting was done in 45 minutes is intriguing. All those personal failures to build relationships are coming back to haunt the Greeks now.

[Steffan]

gruffalo said:

http://www.bbc.co.uk/news/business-33132591

The Beeb reporting that the talk yesterday lasted a whole 45 minutes, doesn't sound like compromise is agreeable to either side.

The article also starts to talk about a messy Greek exit in 2 weeks time.

I actually hope the Greeks do see sense and exit, it will be painful but I am convinced it will be only way they can recover from this, default and rebuild.

What will happen to the Euro?

Gargamel said:

EU issues Greek Citizen To Do list.

• Placed order for tins of corned beef
• Confirm spare batteries for the torch
• Moved all cash into secure mattress shaped deposit account

Tin hats on everyone ... this one is going right to wire.

As Gargamel and guffalo suggest this is going right to the wire and tin hats and cash under tye mattress will be sought by many in Greece. There are two fundamentally different consequences. Greece will be a poor place to live and to try to work if this happens. The Greek people's will have at best a torrid time. The consequences to the EU are much more difficult to peedict because there is much strength in the EU without Greece. However I question whether the considerable doubts and concerns that such an exit must bring upon the EU itself, and it's leaders, can be easily didpelled. For thise reasons predicting the long tern consequences is no easy task.

The EU have been clutching at straws for some time in continuing to run with this nonsense when all the economic indicators for Greece have suggest year upon year upon year that recovery is a pipedream, given the reality of the approach of Syriza. That being the case what will the EU try to do to minimise the collateral damage?

I think the EU may just baulk at the consequences, for the EU itself, of default by Greece, and may therefore try a final desperate gamble to keep Greece onside. If they do, this would only hold for perhaps a month or two but the EU have demonstrated throught this affair that pushing the Probem forward and avoiding difficult decisions is their preferred option. Spending a great deal more of the EU taxpayers money would not be a concern. I also think that creating a credible economic reform program for Greece currently is a very difficult task. Without a credible reform package I cannot see how any real reliance would be placed upon such an arrangement, in all the circumstances? But the EU may preferr that traditional push it forward for somebody else to resolve, approach. Interesting times indeed.

[Mermaid]

Gargamel said:

Hard to tell isn't it. Is it brinkmanship, nothcing up the pressure or a sincere warning.

Think the fact the the meeting was done in 45 minutes is intriguing. All those personal failures to build relationships are coming back to haunt the Greeks now.

So much fudging so far, even more cannot be ruled out even at this late hour. But it seems an end is nearer for the Greek tragedy in the Euro project.

[Esseesse]

If Greece leave the Euro or EU I will try to arrange a holiday there.

[Gargamel]

Mermaid said:

So much fudging so far, even more cannot be ruled out even at this late hour. But it seems an end is nearer for the Greek tragedy in the Euro project.

Agreed, nothing can be ruled out...

But the argument at the moment is only about the 7.5bn which was priced in for bailout II. When it is clear that the Greeks need bailout III+

If they can't agree around terms for a relatively small amount of money, they have very limited chances of getting the wider debt restructured.

I understand the latest Greek proposal was to request if they could "do an Iceland" - unsurprising then that the EU and IMF teams have both told them to "get stuffed"

[gruffalo]

is anyone aware of what the Greek governments income is per month?

If the EU did give the 7.2Bn just how long does that give including their existing income?

Would the EU look at that as an opportunity to buy time and push for a government change in Greece, one that is not at odds with the EU and is willing to reform the Greek tax and pensions system into one that is sustainable?

I guess I am asking if we think that the EU would directly interfere with a sovereign nations democratic process?

[Gargamel]

gruffalo said:

I guess I am asking if we think that the EU would directly interfere with a sovereign nations democratic process?

They already deposed one Greek PM for daring to suggest a referendum, and brought down the Italian Government and put Monti in charge

Or ordering Ireland to re run the Treaty Referendum to get the "right" result

Yes, they would and they have

[slow_poke]

Gargamel said:

Or ordering Ireland to re run the Treaty Referendum to get the "right" result

I wouldn't have put it past them, but there was no need for them to do so. There was enough indigenous support amongst politicians, civil servants, business leaders and the great & good all happily aboard the EU gravytrain with their snouts in the trough

[Huntsman]

Esseesse said:

If Greece leave the Euro or EU I will try to arrange a holiday there.

I have the same sentiment. They'll need all the money they can get.

[PugwasHDJ80]

Huntsman said:

Esseesse said:

If Greece leave the Euro or EU I will try to arrange a holiday there.

I have the same sentiment. They'll need all the money they can get.

i'll arrange a holiday because it will suddenly become asbolutely dirt cheap.

[gruffalo]

Huntsman said:

Esseesse said:

If Greece leave the Euro or EU I will try to arrange a holiday there.

I have the same sentiment. They'll need all the money they can get.

I have to agree, they priced themselves out of the market to a certain extent under the Euro I for one would head back if it became good value again.

[LongQ]

Gargamel said:

If they can't agree around terms for a relatively small amount of money, they have very limited chances of getting the wider debt restructured.

I understand the latest Greek proposal was to request if they could "do an Iceland" - unsurprising then that the EU and IMF teams have both told them to "get stuffed"

It may be a relatively small amount of money but if there is no hope of repaying it or the other amounts due on the basis of terms being considered by the lenders what would be the point of agreeing?

In addition if they agree to unpayable terms for the small amounts they have no obviouus way to get things changed for larger amounts later when, as everyone seems to expect, they will be even deeper in debt to the "Company Store". Once a precedent is set it would require something dramatic to happen for terms to be more favourable at a later stage.

I'm not at all convinced that anything in the strange "science" of Economics really stacks up long term but so far as I can tell no one on here things the Greek economy has anything but a difficult future whether in or out of the EZ and EU. The last election they had was a good one to lose.

No one seems to want to come up with a creative solution for this problem (other than low quality fudging) so one has to assume that the parties in the driving seat of the EZ leviathan have no real interest in helping the people of Greece or are just too stupid to find a way to do so. Or both.

They are, after all, Civil Servants at heart and therefore neither Civil nor Servants.

Squashing Greece would give them another term of terror over any other strugglers, big or small. It's what the EU was created for.