Is the end nigh for the Euro? [vol. 2]

[1point7bar]

Gary11 said:

OK so how exactly does said QE actually (instead of idealy)bolster the economy,

-Banks going broke en masse would be problematic.-

IMO the bankers are playing hardball for this first sector,I am just looking for ANY eveidence of Bank dervied aid for buisness and individuals from this source.

-Share prices (asset inflation)-

Call me cynical but the children are IMO running the sweetshop.

-You've nailed it.-

[Tartan Pixie]

Globs said:

The difficulty in predictions is caused by the rapid and constant changing of the 'rules' by the EU and the ECB.
The euro was due to collapse about 3 years ago, but a combination of the FED, EU, ECB and the complicit governments have managed to successfully grow the debt and recession to the current point.

If the ECB pulls this off and enslaves the whole of europe it will truly be a magnificent achievement for them, unparalleled in history - bigger even that the FED's overturning of the US constitution.

Totally agree with this.

The sad thing is that one of the most basic lessons we learn in life is that to survive you need more money coming in than going out, I'm pretty sure most 10 year old kids could tell you this. There's no way politicians are so stupid they can't grasp this most basic rule of economics, which leads me to believe the euro will fail because there's a deeper fundamental problem which won't be solved by fiddling the numbers.

IMO there are two huge pink elephants in the room which I have not heard any politician or news source talk about, one is global supply and demand while the other is a problem with democracy itself.

Supply and Demand:
This again is a very basic economic concept so lets talk about BRIC and the effects of raising people out of poverty. Assuming supply is fixed by raw materials and manufacturing efficiency while global demand is rising sharply then the cost of manufactured goods must rise. Figuring this out isn't exactly rocket surgery.

Take as an example this graph from the economist: http://www.economist.com/blogs/dailychart/2010/12/... Notice the correlation between rising car sales in china compared to dropping car sales in the west. To me this implies that political promises to 'make poverty history' come with a hefty economic price tag, one that politicians are too spineless to tell people about.

I'm fine with sharing wealth more evenly, after all we can't live in the colonial era forever, however this means European economies need to be leaner and more efficient if we want to be competitive and have a good standard of living. Very few people I speak to have the slightest grasp of why Europeans will have to work harder and longer than their parents did, yet supply and demand is such a simple concept for those who wish to understand it. All it takes is a little education.

Democracy and Education:
This brings me to my second point. The eurozone is not failing because governments have been profligate, it is failing because poorly educated electorates have forced governments to borrow recklessly and would have removed any government that failed to do so. Education education education indeed Mr Blair.

It's a basic rule of democracy that any government which fails the economy also fails at the polls, this creates a perverse necessity for politicians to borrow money just so they can win headlines in the newspapers. The average voter is rarely well educated enough to see past their own mortgage payments or living costs, hence things like GDP/Debt ratio are simply not vote winners. They're a number near the back of a newspaper, something to be ignored on your way to the sports section.

Until our schools and news media take themselves seriously as an important part of our democracy the cycle of government debt will continue, the electorate will continue to make unrealistic demands of their politicians and ultimately democracy itself will fail. Look at Greece and Italy if you don't believe me.

And Finally:
Next time you hear someone talking about spin over substance remember Globs prediction quoted above. The eurozone rot runs much deeper than the numbers, if our politicians lack the substance to apply more than sticking plasters then we will quickly find that our bankers have substance aplenty and it won't look pretty when they apply it.



.....and breathe. Needed to get that off my chest........carry on.

[smack]

Checking in to Vol 2 to add to my watch list.

[Andrew[MG]]

Maybe Canada isn't the best place to move to http://www.economist.com/node/21546057

[Andy Zarse]

Gary11 said:

So it looks probable Greece may finaly default ultimately no one wanting to agree to draconian austerity measures for the public sector workers lasting in many cases util their career end (aprox 45yrs old in Greece!!).
It will be a similar scenario for the other indebted nations,we have however another large helping of QE (£50bn),my question is how actually does this filter through to stop the double dip,and as it is always held on to by the banks and NOT lent how does inflation come into play as a concern?
G
(does this mean we now owe £1tn + £50bn?)

www.mindfulmoney.co.uk/wp/author/shaun-richards/


"Today is yet another day where deadlines for debt and bailout deals for Greece have come and gone with no resolution. It is also a day with a grim historical portent as on this day some 179 years ago a Bavarian was crowned King Otto the first of Greece. He had been brought in to ensure payment of the matter mentioned in Hansard (The UK Parliament’s official record) below.


It was then found that a loan was necessary, and it was determined that the allied Powers should be the guarantees for its repayment.

There are all sorts of historical analogies here. For a start what is it with Germans and other countries Royal Families? And as I am typing this there is another type of Bavarian intervention as her Finance Minister has just announced that Greece won’t be able to avert default... "

Edited by Andy Zarse on Monday 6th February 18:20

[Ozzie Osmond]

In my opinion they will still not go bust so long as they behave sensibly.

However, their ability to behave sensibly now hangs in the balance. They seem to be looking out over the edge of the frying pan and thinking it looks nice and cool in the fire....

Madness.

[Globs]

Ozzie Osmond said:

In my opinion they will still not go bust so long as they behave sensibly.

However, their ability to behave sensibly now hangs in the balance.

Hangs in the balance?

Which one of their previous defaults leads you to that conclusion?

[Steffan]

Ozzie Osmond said:

In my opinion they will still not go bust so long as they behave sensibly.

However, their ability to behave sensibly now hangs in the balance. They seem to be looking out over the edge of the frying pan and thinking it looks nice and cool in the fire....

Madness.

Unless, like me, you think 100% write offs and no interest ever again on the whole of Greek Debt is actually the better default package.

Once the Greeks believe the Euro subsidy is finally gone forever the Greeks will look for the softest option.

Outright default is IMO the better economic position.

[eharding]

Ozzie Osmond said:

In my opinion they will still not go bust so long as they behave sensibly.

However, their ability to behave sensibly now hangs in the balance. They seem to be looking out over the edge of the frying pan and thinking it looks nice and cool in the fire....

Madness.

Daily Telegraph said:

Bloomberg reports that Greek PM Lucas Papademos has requested the country’s finance ministry to prepare a document on the implications of a Greek default.

Mr Papademos asked the ministry:
to record accurately and realistically all the consequences of the country’s exit from the eurozone.

That Lucas Papademos, he's such a comedian...always laughing and cracking jokes.

Life and soul of the party, our Lucas: "Finance Ministry"..."Accurately"..."realistically"....oh, my aching ribs.

[Steffan]

eharding said:

Ozzie Osmond said:

In my opinion they will still not go bust so long as they behave sensibly.

However, their ability to behave sensibly now hangs in the balance. They seem to be looking out over the edge of the frying pan and thinking it looks nice and cool in the fire....

Madness.

Daily Telegraph said:

Bloomberg reports that Greek PM Lucas Papademos has requested the country’s finance ministry to prepare a document on the implications of a Greek default.

Mr Papademos asked the ministry:
to record accurately and realistically all the consequences of the country’s exit from the eurozone.

That Lucas Papademos, he's such a comedian...always laughing and cracking jokes.

Life and soul of the party, our Lucas: "Finance Ministry"..."Accurately"..."realistically"....oh, my aching ribs.

I think Mr Papademous is a canny politician who flatters to deceive.

I think he will try to bounce Greece into acceptance of an imopssibly onerous non default package to gain acceptance of the last tranche of Euro subsidy.

Subsequently Greece will default. Thus getting as much as possible and then seeking the easiest option. Look at the recent history of Greece. There is no way the Greeks are going to knuckle down for years to repay their debts.

Edited by Steffan on Monday 6th February 20:39

[0a]

Steffan said:

I think Mr Papademous is a canny politician who flatters to deceive.

I think he will try to bounce Greece into acceptance of an imopssibly onerous non default package to gain acceptance of the last tranche of Enru subsidy.

Subsequently Greece will default. Thus getting as much as possible and then seeking the easiest option. Look at the recent history of Greece. There is no way the Greeks are going to knuckle down for years to repay their debts.

As you state Greece will default. History, economics and politics tell us this underlined a thousand times.

I believe this he is seeking this report as a way of clearing the name of Merkell and Sarkozy. The report will be presented as the menu of options available to the Greek people, and for Greece default is the least bad option. They cannot afford to pay their debt and there is a lack of political will to comply with a negotiated partial default.

The EU will be able to present this as Greece leaving rather than being forced out. They will announce that they respect Greece's decision, and that as it was the choice of the Greek people to leave, there is no reason why this will spread to other countries.

[Driller]

Globs said:

The difficulty in predictions is caused by the rapid and constant changing of the 'rules' by the EU and the ECB.
.

Well if it's that difficult, maybe people should refrain from indulging in such dramatic and reckless fortune telling. Non?

[Gary11]

Talking of money not morals,who actualy stands to gain (fiscaly) from Greece staying put? I dont think the Greek people want 5yrs of austerity and more debt (per bailout),the sums dont add up for any suppliers of future bailout as it WONT be repaid,so then my view is its vanity no more they will keep the ideal of the Euro irrespective of cost,unjustifyable lunacy IMO.
G

[Andy Zarse]

Ozzie Osmond said:

In my opinion they will still not go bust so long as they behave sensibly.

However, their ability to behave sensibly now hangs in the balance. They seem to be looking out over the edge of the frying pan and thinking it looks nice and cool in the fire....

Madness.

Tell the thousands of people in Athens living in their cars and on the streets that it's madness.

Can you explain how further austerity will lift Greeks out of debt and why it won't finally decimate their economy.

Like all socialists you have no heed for the welfare of your fellow man, only of social theories.

[0a]

Andy Zarse said:

Tell the thousands of people in Athens living in their cars and on the streets that it's madness.

Can you explain how further austerity will lift Greeks out of debt and why it won't finally decimate their economy.

Like all socialists you have no heed for the welfare of your fellow man, only of social theories.

Spot on. Even on the suggested best case debt/GDP ratios suggested by the EU and even with decades of austerity the numbers just don't add up in any case. Greece's main industry - the ability to borrow at German rates and spend It - will be gone and they will still be tied into the Euro instead of devaluing and having a chance.

[Ozzie Osmond]

Andy Zarse said:

Tell the thousands of people in Athens living in their cars and on the streets that it's madness.

Can you explain how further austerity will lift Greeks out of debt and why it won't finally decimate their economy.

Like all socialists you have no heed for the welfare of your fellow man, only of social theories.

Those people are living in cars and in the streets NOW. How will it help them to be doing the same thing in a bankrupt country?

I anticipate your final comment was intended to be some sort of insult. Do try harder.

[0a]

Well it looks like Germany is going to cut Greece free now they realise the only money Greece will now be able to use to buy German exports is German money.

[Andy Zarse]

Ozzie Osmond said:

Andy Zarse said:

Tell the thousands of people in Athens living in their cars and on the streets that it's madness.

Can you explain how further austerity will lift Greeks out of debt and why it won't finally decimate their economy.

Like all socialists you have no heed for the welfare of your fellow man, only of social theories.

Those people are living in cars and in the streets NOW. How will it help them to be doing the same thing in a bankrupt country?

I anticipate your final comment was intended to be some sort of insult. Do try harder.

Not an insult, a simple observation.

Do you agree they're living in cars because of the euro? A return to the drachma would at least offer some hope of a return to prosperity. You could at least explain how more austerity and staying in the insanity of the euro would do the same, rather than the depression they've had for the last four years.

Edited by Andy Zarse on Monday 6th February 22:41

[Gary11]

0a said:

Well it looks like Germany is going to cut Greece free now they realise the only money Greece will now be able to use to buy German exports is German money.

Return of the "Ponzi" the circle is complete!

[Gary11]

Andy Zarse said:

Not an insult, a simple observation.

Do you agree they're living in cars because of the euro? A return to the drachma would at least offer some hope of a return to prosperity. You could at least explain how more austerity and staying in the insanity of the euro would do the same, rather than the depression they've had for the last four years.

Edited by Andy Zarse on Monday 6th February 22:41

+1
Perhaps todays the day looking at Merkozys body language!