Economic Meltdown The PIGS
Discussion
Portugal Ireland Greece and Spain (The PIGS) are all heading for economic meltdown.
Indeed Ireland and Greece are already nudging on the precipice.
I cannot see Germany and France who are the economic backbone of Europe being prepared to carry these four for long.
Nobody else in Europe is big enough.
Its one thing to give £70,000 MILLION to Ireland and call it a loan.
Its NOT a loan there is no collateral to secure it and Ireland cannot realistically repay such a sum. It ain't coming back.
Repay it with what? Shamrocks? Potatoes?
It is a gift.
BUT no one is going to bail out Portugal and Spain like this.
The Central European Bank is not big enough for this scale of problem.
So what will happen?
Are they going into currency free fall?
Will Europe be split up?
Will there be a complete revision of the EEC?
I don't know but one thing is certain.
This is a` hell of an economic mess and there are NO easy answers?
AND it will not continue like this for long. Maybe 18 months maybe 2 years.
Yet there is virtually nothing about the huge problem that Europe faces anywhere in the press. Odd isn't it?
IDEAS?
Indeed Ireland and Greece are already nudging on the precipice.
I cannot see Germany and France who are the economic backbone of Europe being prepared to carry these four for long.
Nobody else in Europe is big enough.
Its one thing to give £70,000 MILLION to Ireland and call it a loan.
Its NOT a loan there is no collateral to secure it and Ireland cannot realistically repay such a sum. It ain't coming back.
Repay it with what? Shamrocks? Potatoes?
It is a gift.
BUT no one is going to bail out Portugal and Spain like this.
The Central European Bank is not big enough for this scale of problem.
So what will happen?
Are they going into currency free fall?
Will Europe be split up?
Will there be a complete revision of the EEC?
I don't know but one thing is certain.
This is a` hell of an economic mess and there are NO easy answers?
AND it will not continue like this for long. Maybe 18 months maybe 2 years.
Yet there is virtually nothing about the huge problem that Europe faces anywhere in the press. Odd isn't it?
IDEAS?
Steffan,
I think I'll Google immigration procedures to both the USA and also the Cayman Islands (actually anywhere in the Carrib will do me)! Your scenario is, sad to say, not unreasonable.
Whenever I start to think about who gets UK social security for almost no "contribution to the UK economy/society/culture", and what as a true blue Brit I've paid into corporate UK over the past 49 years, I find it difficult answer the question "What am I doing staying here?".
R.
I think I'll Google immigration procedures to both the USA and also the Cayman Islands (actually anywhere in the Carrib will do me)! Your scenario is, sad to say, not unreasonable.
Whenever I start to think about who gets UK social security for almost no "contribution to the UK economy/society/culture", and what as a true blue Brit I've paid into corporate UK over the past 49 years, I find it difficult answer the question "What am I doing staying here?".
R.
The EU has agreed a current economic fund of €440 billion to loan out to countries that are worst affected by the global recession. Germany won't drop the Euro, neither will France or many of the other EU members who don't have an urgent economic problem (which is most of them). More wishful thinking by the UK which has one of the worst economies in Europe reflected by the drastic measures taken by the current government in office.
Ok, I'll declare my interest, I'm Irish. Yes we are in trouble, but we have undertook to repay our loans. The question now being asked in Ireland is did not the ECB not fail in it's duty to monitor our banks and other countries banks when they lent the money recklessly ? Did not the German and UK banks not take excessive risks in lending money 5 years ago for property ? We are being charged 6.5% interest which is penal. There s a lot of Irish people who want to renegotiate this. We go to the polls tomorrow in a General Election to elect a new government so we will soon see.
The Term PIGS is.......not nice !
The Term PIGS is.......not nice !
Sadly I do not think £440 Billion is enough to save Portugal and Spain.
More importantly does anyone really believe that either country can actually service such a debt.
Neither Portugal nor Spain can afford either the interest or the capital repayment. These are essentially failing agricultural economies. They cannot compete with the likes of France and Germany or hold the same currency value the underlying assets are simply not there.
They CANNOT pay the money back nor can Greece nor can Ireland.
The Commercial Banks throughout the world made a fundamental error in lending to borrowers en masse who could not actually service the debts they were taking on and could not afford to repay the money. These Banks have only survived because of the worldwide banking rescue by the whole of the World Economy. These 'loans' are loans in name only. They WILL NOT BE REPAID.
These countries can offer neither any security nor any realistic means of repaying these 'loans'.
It sounds so much better if politicians say this is only a loan. Unfortunately its a gift and it will not come back.
I think we are looking at the beginnings of the cracks in the European Monetary System which will eventually lead to the PIGS falling out of the Euro and a complete realignment of world currencies.
I am NOT defending the UK economy it is in dire straights. We have our own problems which I have grave reservations about.
But because we are not in the Euro, our failure will not threaten the Euro.
I believe the systemic failures of the PIGS will destroy the Euro in its present form in about two years possibly three years.
It is only a matter of time. Like the Titanic these economies are sinking steadily and eventually will fall out of the Euro.
Question is not if it's when.
More importantly does anyone really believe that either country can actually service such a debt.
Neither Portugal nor Spain can afford either the interest or the capital repayment. These are essentially failing agricultural economies. They cannot compete with the likes of France and Germany or hold the same currency value the underlying assets are simply not there.
They CANNOT pay the money back nor can Greece nor can Ireland.
The Commercial Banks throughout the world made a fundamental error in lending to borrowers en masse who could not actually service the debts they were taking on and could not afford to repay the money. These Banks have only survived because of the worldwide banking rescue by the whole of the World Economy. These 'loans' are loans in name only. They WILL NOT BE REPAID.
These countries can offer neither any security nor any realistic means of repaying these 'loans'.
It sounds so much better if politicians say this is only a loan. Unfortunately its a gift and it will not come back.
I think we are looking at the beginnings of the cracks in the European Monetary System which will eventually lead to the PIGS falling out of the Euro and a complete realignment of world currencies.
I am NOT defending the UK economy it is in dire straights. We have our own problems which I have grave reservations about.
But because we are not in the Euro, our failure will not threaten the Euro.
I believe the systemic failures of the PIGS will destroy the Euro in its present form in about two years possibly three years.
It is only a matter of time. Like the Titanic these economies are sinking steadily and eventually will fall out of the Euro.
Question is not if it's when.
Steffan said:
Sadly I do not think £440 Billion is enough to save Portugal and Spain.
It's not. Portugal alone has debt of about £350 Billion. Spain more than that, Italy has about £1.5 Trillion. Remember that once these economies tip, the commercial world will short sell it to make money, which reduces the effectiveness of the bailout further. Germany may have the stomach to foot the bill for Portugal. But if Spain or Italy goes down then all bets are off.
majordad said:
The question now being asked in Ireland is did not the ECB not fail in it's duty to monitor our banks and other countries banks when they lent the money recklessly ? Did not the German and UK banks not take excessive risks in lending money 5 years ago for property ? We are being charged 6.5% interest which is penal. There s a lot of Irish people who want to renegotiate this. We go to the polls tomorrow in a General Election to elect a new government so we will soon see.
The Term PIGS is.......not nice !
A few points....The Term PIGS is.......not nice !
It was the Irish Central Bank's duty to monitor their banks not the ECB's
Some UK banks took excessive risks but not all. You need to remember the UK banks are much bigger institutions, have a greater call on capital in distress and are part of a much bigger economy so they didn't bring the country down. That said the UK regulator was absolutely useless and it's a scandal that the guy on the MPC/BoE ultimately responsible for this (Paul Tucker)is currently being groomed for the tob job.
It's an unfortunate consequence of the situation that Ireland found themselves in that they couldn't demand a lower interest rate. Most people/companies/countries with a poor credit rating find borrowing money very expensive...
The term PIGS is actually about twenty years old and initially included Italy and not Ireland....so you should feel pleased you've now been included in the club.
Thanks Beardy, I'll sleep better after that. BTW, I grew a beard at 51yrs 5 yrs ago, it should have been a warning I suppose. One of the indicators about Ireland was we sold more BMW 3 Series than Mondeos in them years, and even now, and we sell more E Class Mercs than C Class ones. We are in the end of an election this weekend and the result while not unexpected is stunning. A new world for us on Monday Mornong.
majordad said:
Ok, I'll declare my interest, I'm Irish. Yes we are in trouble, but we have undertook to repay our loans. The question now being asked in Ireland is did not the ECB not fail in it's duty to monitor our banks and other countries banks when they lent the money recklessly ? Did not the German and UK banks not take excessive risks in lending money 5 years ago for property ? We are being charged 6.5% interest which is penal. There s a lot of Irish people who want to renegotiate this. We go to the polls tomorrow in a General Election to elect a new government so we will soon see.
The Term PIGS is.......not nice !
With the greatest respect, bThe Term PIGS is.......not nice !
ks. The first step to fixing the mess is to stand up and take responsibility for your own problem - just like everything else in life.
As to shouldn't someone have steepped in & stopped it, plenty of people told Ireland it was mad to join the Euro and take on a lower interest rate when what it needed to be doing was raising rates to take the heat out the Irish economy.
And besides, would the Irish government of 5 years ago have accepted a bunch or Eurocrats/CE Bankers waltzing in and laying down the law? I think not.
I agree the default option is an interesting concept.
However I think the whole government provision of health, education, social services etc would become unfundable.
I think this`will be the problem for all these Euro failures (PIGS) I cannot see how their economies are capable of sustaining the living standards they have aspired to.
Germany and France will not bail them all out.
The expression PIGS is not intended as an insult. I just like nemonics.
Seriously this is going to be a HUGE problem for Europe.
We may well see a sudden contraction of the EEC with only the main players remaining in the Euro.
What is certain is the these four countries CANNOT continue as they are.
I find the Irish election interesting.
It is like rearranging the deckchairs on the Titanic.
It tidies the ship up but the ship is still sinking.
These countries are going to fail. Just a question of time.
I have no answers.
But I welcome the discussions.
Can anyone with a knowledge of Macroeconomics enlighten us further?
However I think the whole government provision of health, education, social services etc would become unfundable.
I think this`will be the problem for all these Euro failures (PIGS) I cannot see how their economies are capable of sustaining the living standards they have aspired to.
Germany and France will not bail them all out.
The expression PIGS is not intended as an insult. I just like nemonics.
Seriously this is going to be a HUGE problem for Europe.
We may well see a sudden contraction of the EEC with only the main players remaining in the Euro.
What is certain is the these four countries CANNOT continue as they are.
I find the Irish election interesting.
It is like rearranging the deckchairs on the Titanic.
It tidies the ship up but the ship is still sinking.
These countries are going to fail. Just a question of time.
I have no answers.
But I welcome the discussions.
Can anyone with a knowledge of Macroeconomics enlighten us further?
Ireland joined the Euro of it's own free will - no-one forced it. The country then experienced a huge boom where people borrowed loads on their racing house prices and everyone was happy that they got 'rich'. The problem is that Ireland is not the UK. In the same way that if a footballer on 150k a week wastes 10k on gambling it doen't really matter, when Ireland (and Iceland for that matter) try and play the same games and lose they don't have the underlying incomes to pay for it.
The UK, and London more specifically, is a worldwide centre which attracts investment from all corners. Housing in the decent parts of central London have gone up since the credit crunch and are at all time highs. The quantity of people wanting to live there means there is a depth to the housing market which never existed in Ireland excpet in the minds of people who lived there.
What they need to realise though is the loan package it took will not be renegotiated. If they had not taken the bailout the markets would have broken Ireland into pieces. The government wouldn't have been able to borrow at 6-7% it would have been more like 16-17%!!! Governments survice on being able to borrow money from the markets and when that dries up you are screwed.
Ireland can leave the Euro and default whenever it wants. It can then let its currency free fall and try and trade it's way out of trouble. However, rather like addiction, the first step to solving the problem is to stand up and take responsibility for you own actions. Ireland screwed up and it has no-one else to blame but itself.
Greece will be able to solve it's problems if they can have a total shift in the mental outlook of the population and the way they approach the paying of tax, or rather lack of paying!! Doctors earning half a million report the earn 9k will need a total shift.
Spain and Portugal will need a long term reduction in spending and harsh cuts to last a very, very long time to regenerate. Italy is anyone's guess as you can never trust the figures they report anyway!!
Oh and..
[quote=Steffan]
I find the Irish election interesting.
It is like rearranging the deckchairs on the Titanic.
[quote/]
Have some of these
Edit - to fix quotes
The UK, and London more specifically, is a worldwide centre which attracts investment from all corners. Housing in the decent parts of central London have gone up since the credit crunch and are at all time highs. The quantity of people wanting to live there means there is a depth to the housing market which never existed in Ireland excpet in the minds of people who lived there.
What they need to realise though is the loan package it took will not be renegotiated. If they had not taken the bailout the markets would have broken Ireland into pieces. The government wouldn't have been able to borrow at 6-7% it would have been more like 16-17%!!! Governments survice on being able to borrow money from the markets and when that dries up you are screwed.
Ireland can leave the Euro and default whenever it wants. It can then let its currency free fall and try and trade it's way out of trouble. However, rather like addiction, the first step to solving the problem is to stand up and take responsibility for you own actions. Ireland screwed up and it has no-one else to blame but itself.
Greece will be able to solve it's problems if they can have a total shift in the mental outlook of the population and the way they approach the paying of tax, or rather lack of paying!! Doctors earning half a million report the earn 9k will need a total shift.
Spain and Portugal will need a long term reduction in spending and harsh cuts to last a very, very long time to regenerate. Italy is anyone's guess as you can never trust the figures they report anyway!!
Oh and..
[quote=Steffan]
I find the Irish election interesting.
It is like rearranging the deckchairs on the Titanic.
[quote/]
Have some of these
Edit - to fix quotes
Edited by R11ysf on Sunday 27th February 11:24
Edited by R11ysf on Sunday 27th February 11:25
Ireland joined the Euro of it's own free will - no-one forced it. The country then experienced a huge boom where people borrowed loads on their racing house prices and everyone was happy that they got 'rich'. The problem is that Ireland is not the UK. In the same way that if a footballer on 150k a week wastes 10k on gambling it doen't really matter, when Ireland (and Iceland for that matter) try and play the same games and lose they don't have the underlying incomes to pay for it.
The UK, and London more specifically, is a worldwide centre which attracts investment from all corners. Housing in the decent parts of central London have gone up since the credit crunch and are at all time highs. The quantity of people wanting to live there means there is a depth to the housing market which never existed in Ireland excpet in the minds of people who lived there.
What they need to realise though is the loan package it took will not be renegotiated. If they had not taken the bailout the markets would have broken Ireland into pieces. The government wouldn't have been able to borrow at 6-7% it would have been more like 16-17%!!! Governments survice on being able to borrow money from the markets and when that dries up you are screwed.
Ireland can leave the Euro and default whenever it wants. It can then let its currency free fall and try and trade it's way out of trouble. However, rather like addiction, the first step to solving the problem is to stand up and take responsibility for you own actions. Ireland screwed up and it has no-one else to blame but itself.
Greece will be able to solve it's problems if they can have a total shift in the mental outlook of the population and the way they approach the paying of tax, or rather lack of paying!! Doctors earning half a million report the earn 9k will need a total shift.
Spain and Portugal will need a long term reduction in spending and harsh cuts to last a very, very long time to regenerate. Italy is anyone's guess as you can never trust the figures they report anyway!!
Oh and..
Edit - to fix quotes
The UK, and London more specifically, is a worldwide centre which attracts investment from all corners. Housing in the decent parts of central London have gone up since the credit crunch and are at all time highs. The quantity of people wanting to live there means there is a depth to the housing market which never existed in Ireland excpet in the minds of people who lived there.
What they need to realise though is the loan package it took will not be renegotiated. If they had not taken the bailout the markets would have broken Ireland into pieces. The government wouldn't have been able to borrow at 6-7% it would have been more like 16-17%!!! Governments survice on being able to borrow money from the markets and when that dries up you are screwed.
Ireland can leave the Euro and default whenever it wants. It can then let its currency free fall and try and trade it's way out of trouble. However, rather like addiction, the first step to solving the problem is to stand up and take responsibility for you own actions. Ireland screwed up and it has no-one else to blame but itself.
Greece will be able to solve it's problems if they can have a total shift in the mental outlook of the population and the way they approach the paying of tax, or rather lack of paying!! Doctors earning half a million report the earn 9k will need a total shift.
Spain and Portugal will need a long term reduction in spending and harsh cuts to last a very, very long time to regenerate. Italy is anyone's guess as you can never trust the figures they report anyway!!
Oh and..
Steffan said:
I find the Irish election interesting.
It is like rearranging the deckchairs on the Titanic.
Have some of these It is like rearranging the deckchairs on the Titanic.
Edit - to fix quotes
Edited by R11ysf on Sunday 27th February 11:24
Edited by R11ysf on Sunday 27th February 11:26
To be honest, elections in Ireland were always of that nature. The differences between the two main parties (Fíanna Fáil and Fíne Gael) were never based on economic strategies - more on historical (and now irrelevant) differences surrounding their stance during the Irish Civil War of the early 1920s.
The article that appears in the Telegraph today should be printed and distributed to every registered Irish voter, with this section printed in Large Bold Type
"A European diplomat, from a large eurozone country, told The Sunday Telegraph that "the more the Irish make a big deal about renegotiation in public, the more attitudes will harden".
"It is not even take it or leave it. It's done. Ireland's only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told," said the diplomat."
A referendum should then be called with the specific question - Default? Yes or no.
The result, whatever that should be, would then be implemented.
The Irish have one last shot at having some sort of role in determining their own future as a nation. It will be messy and gruesome either way, but it boils down to this - does Ireland have a future as a sovereign nation or does it accept being the EU's puppet forever. That has to be for the people to decide.
http://www.telegraph.co.uk/news/worldnews/europe/i...
"A European diplomat, from a large eurozone country, told The Sunday Telegraph that "the more the Irish make a big deal about renegotiation in public, the more attitudes will harden".
"It is not even take it or leave it. It's done. Ireland's only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told," said the diplomat."
A referendum should then be called with the specific question - Default? Yes or no.
The result, whatever that should be, would then be implemented.
The Irish have one last shot at having some sort of role in determining their own future as a nation. It will be messy and gruesome either way, but it boils down to this - does Ireland have a future as a sovereign nation or does it accept being the EU's puppet forever. That has to be for the people to decide.
http://www.telegraph.co.uk/news/worldnews/europe/i...
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