[Closed] How utterly f******* are we now?

Teh Greek austerity measures are actually making the situation worse anyway. reducing demand and shrinking the economy. The last round of austerity made the people poorer without reducing the problems - so more is prescribed.

Insanity is continuing to do the same thing over and over again, and expecting different results.

Would be much better for the Greeks to call it a day.

Imagine you stopped payments on your house but still lived in it, how much better off would you be.

Why oh why are we scared to let banks take losses. What other company do government bail out like that.

No way will Greece vote yes to stay in this mess.

teamhurtmore - Member
Mr Woppit - an interesting read:

Yes, that is interesting. There's very little in the mainstream media about the psychology behind what Sarky and Mumsy are trying to do. The disastrous end of the Euro experiment is staring them in the face but they're in denial...

A hard rain's going to fall, as Bob once put it.

The disastrous end of the Euro experiment is staring them in the face but they're in denial...

No, no, no. TJ has told you that the Euro is here to stay. That is a FACT and therefore cannot be denied.

the Euro is here to stay.

But perhaps not as we know it, Jim.

it's got a crap name anyway.

good riddance.

i like the idea of a single currency, but 'euro'? - that's just a rubbish name.

call it a squib/noggin/dave/sheckle/solidus/goat, anything but 'euro'...

Not sure that the end of the Euro is here quite yet, so long as Pinky & Perky are prepared to let Greece jump ship AND at the same time they commit a lot more than the €1tn to the EFSF. And Italy gets rid of [i]il idiota[/i], because running the economy is clearly beyond him

Unless all of these things happen, however, you're looking at the whole thing gradually falling apart. Greece will depart, with the only variable being timing. The longer everyone takes to realise this, the worse it will be, and there'd be an inevitability about Italy's departure.

Why oh why are we scared to let banks take losses. What other company do government bail out like that.

I am not an apologist for banks BTW, but let me try to explain, the why? Any economy requires a healthy and functioning banking system to work successfully. In normal conditions and in normal cycles, banks do bear the brunt of any losses that may occur from a cyclical downturn/recession (as do their shareholders, (most!!) employees and customers). But these are far from normal circumstances. Many factors resulted in what began as a household debt crisis, leading to a banking and then a sovereign debt crisis. The upshot is that if the bank's were forced to realise their losses on their gov bond holdings, there would be very real question marks over their solvency. Even if this was not enough to close them down it would lead to a liquidity crisis that would do the job anyway.

The banks all know this, which is why they are scared to lend to each other. On top of this they are having to adjust to a new regulatory environment which is making it very difficult for them to lend.

But if the banking system does not work, then the whole economy suffers. It is this unique role that leads to them getting "special' treatment. And really there is no option to this - that is not to say that strong conditions should not be attached to the help that they receive, but that's another story.

The end of the Eurozone, as we know it today, is nigh. Fundmental changes will have to happen either towards closer integration or towards separate distinct units (eg, N Europe, S Europe and UK etc). Either way, the S European economies need to be given room to adjust their economies in a more flexible way that the current system allows.

I am not an apologist for banks BTW, but let me try to explain, the why? Any economy requires a healthy and functioning banking system to work successfully. In normal conditions and in normal cycles, banks do bear the brunt of any losses that may occur from a cyclical downturn/recession (as do their shareholders, (most!!) employees and customers). But these are far from normal circumstances. Many factors resulted in what began as a household debt crisis, leading to a banking and then a sovereign debt crisis. The upshot is that if the bank's were forced to realise their losses on their gov bond holdings, there would be very real question marks over their solvency. Even if this was not enough to close them down it would lead to a liquidity crisis that would do the job anyway.

The banks all know this, which is why they are scared to lend to each other. On top of this they are having to adjust to a new regulatory environment which is making it very difficult for them to lend.

But if the banking system does not work, then the whole economy suffers. It is this unique role that leads to them getting "special' treatment. And really there is no option to this - that is not to say that strong conditions should not be attached to the help that they receive, but that's another story.

The disastrous end of the Euro experiment is staring them in the face but they're in denial..

Its not an experiment - its a done deal and how is it about the end anyway?

Its a strong currency with some of the biggest economies in the world supporting it. I see absolutely no need for this to be the end of what has been a very successful currency union. Its not in the interests of anyone in it for it to end.

but some people like to watch car crashes, it's entertaining to watch the wheels fall off.

the bigger/faster/shinier/more expensive the car, the more fun it is to watch it crash.

a lot of people [i]want[/i] the euro to collapse, i think they've confused this with thinking it [i]will[/i]...

5thElephant - I agree, hence my final point. But equally why should a bank that has managed itself successfully through the crisis (eg Standard Chartered) be vilified along with the rest.

But (excuse the pun) there is the obvious elephant in the room issue of remuneration - banking reflects the rest of the economy and there has been a similar massive concentration of income into the top echelons within banking. This is despite the fact that the senior managment teams have led them into disaster and continue to manage businesses that are unable to deliver returns above their cost of capital and/or rely on state funding and support.

Its been an absurd dereliction of duty of remuneration committees and shareholders IMHO!!

Meanwhile, out on planet TJ...

ahwiles

a lot of people want the euro to collapse, i think they've confused this thinking it will...

I agree.

TJ please go to the citizens of S Europe and explain:

a very successful currency union. Its not in the interests of anyone in it for it to end.

the euro [u]is[/u] successfull; lots of countries adopted it.

a lot of people think that europe is in trouble [i]because[/i] of the euro, it isn't.

'europe' is in trouble because member states have been spending too much/taxing too little. running up massive debts in the belief that economic growth would allow us to meet the repayments*.

we're in more or less the same kind of mess, and we're not 'in the euro'.

the euro is not to blame.

if i ran up a few grand on a credit card, assuming that i'll get a pay rise soon, and then i'll be able to pay off/service the debt, a lot of people would call me foolish.

they'd be right.

so why is it ok to run a country like this?

So woppit - why is it an experiment and why is this the end?

The currency markets don't seem to believe its the end or they would be selling Euros and buying £ or $ or yen. Ah but those economies are all in far worse shape than the euro economies so the euro remains a highly valued currency.

teamhurtmore Why do you claim its not in their interests ?

I interested in your logic.

Loads of posturing but short on reasoning why the Euro must collapse. I see no reason why its will and no one on here has yet given one have they?

Don't be ridiculous - QE in US and UK is a deliberate policy to weaken their currencies. Notice that the Swiss, Jap's, Brazilians etc are all trying to do the same. Why - it's bloody obvious. Again go to S Europe and tell them why they are better off with a strong and inflexible currency!!

Wunundred!

And if we weren't then, we certainly are now. 😀

One simple piece of logic - since the advent of the Euro - France, Spain, Italy, Greece, Portugal and Ireland have seem major weaknesses in their cost-competitiveness. The example of Germany in the early 2000s shows how long it takes to restore cost-competitiveness even in periods of high UN.

ahwiles - Member

the euro is successfull; lots of countries adopted it.

a lot of people think that europe is in trouble because of the euro, it isn't.

europe is in trouble because they/we have been spending too much/taxing too little. running up massive debts in the belief that economic growth would allow us to meet the repayments.

Can you explain that a little further please?

My understanding is that it is not all of Europe which is in deep trouble, but individual countries, and that because those particular countries share a currency with the stronger European economies their options for fixing their current problems are very much limited. So whilst it may not have caused the problem it is making it much harder to resolve.

I am a financial simpleton though. 🙂

[url= http://www.bbc.co.uk/news/world-15575198 ]Greek PM to resign[/url]

I have to say that I'm finding a new found respect for the Greek PM, he seems to have decided that he's going to be shafted which ever way he turns, so he may as well either get the peoples mandate to do it, or make it someone else's problem. If he goes and the new govt cancels the referendum I reckon Greece will burn.

So, PM resigns, general election, weak new government, ongoing financial chaos, another election, more chaos, more demos, army steps in to maintain order. Doesn't look good.

So now we are about to get a National Unity government which signs off on the bail-out. Thats fine but what about the referndum that was offered, once that Pandora's box is opened I'm not sure they can just close it. Playing with fire, gonna be trouble on the streets....

how can a currency leave the euro though? I don't see how it can work. Greece could create some 'new' drackmahs, but no-one would want to exchange their euros for them as the drackmahs would quickly become worthless??

They may create a new drachma and announce a set FX conversion rate. This is unlikey to benefit holders of the new currency (in Argentina they forced conversion of $ into peso at 1:1 crippling people's savings) so they are likely to withdraw money from banks now and ship it offshore. A withdrawal of liquidity from Greek banks would be very destabilising.

retro83 - Member

"ahwiles - Member

the euro is successfull; lots of countries adopted it.

a lot of people think that europe is in trouble because of the euro, it isn't.

europe is in trouble because they/we have been spending too much/taxing too little. running up massive debts in the belief that economic growth would allow us to meet the repayments."

________________________________________________________________

Can you explain that a little further please?

My understanding is that it is not all of Europe which is in deep trouble, but individual countries, and that because those particular countries share a currency with the stronger European economies their options for fixing their current problems are very much limited. So whilst it may not have caused the problem it is making it much harder to resolve.

I am a financial simpleton though.

er, yes. not all of europe is in trouble/lots of debt; not all of the 'euro zone' is in trouble/lots of debt; Germany for example.

Germany haven't been spending money like drunken sailor in a whore-house for the best part of a decade. Greece has, and it's in trouble now because:

A) they thought that their economy would grow, allowing them to meet the debt repayments - it didn't.

(they were planning on a pay-rise: i don't know about you, but i call this sort of behaviour 'bloody stupid' - take note Ed Balls)

B) their national debts have been reclassified as 'dodgy' - meaning they have to pay more in interest.

i think it's fair to say that right now, and for the next few years/decades, Greece will suffer if it stays in the euro.

the euro needs greece more than greece needs the euro.

i may be wrong, i am also a financial simpleton.

Another finacial simpletons two-peneth

Isn't the problem the domino effect. If Greece leaves the Euro, there will be a bolt for the exits by Portugal, Italy, Spain and Ireland as big banks go bust. Resulting in utter chaos as no-one would know the true level of any individual currencies?

Aren't they talking about devaluations of up to 80% 😯

a question to mull over: would you lend money to greece?

if so, under what conditions?

high interest?

power of veto over national spending policy?

Should I have a kebab for lunch or wait till tea time when it may be cheaper ?

Or will the Germans have moved in on the kebab teritory and i will only be able to get sausages for tea ?

Good article in the Guardian

[url= http://www.guardian.co.uk/commentisfree/2011/nov/02/elite-europe-model-failed?INTCMP=SRCH ]PANIIIIIIIIIIIIIIIIIIIC!!!!![/url]

So, PM resigns, general election, weak new government, ongoing financial chaos, another election, more chaos, more demos, army steps in to maintain order...

I guess that's the worst case scenario sorted then!

Ever the optimist eh? 😉

But other than that Z-11, do you think things will work themselves out?

http://www.ft.com/cms/s/0/0a35504a-0615-11e1-a079-00144feabdc0.html#axzz1cd6wYb7H

Fun (?!?) little diagram from the FT.

Isn't the problem the domino effect. If Greece leaves the Euro, there will be a bolt for the exits by Portugal, Italy, Spain and Ireland as big banks go bust. Resulting in utter chaos as no-one would know the true level of any individual currencies?

Binners, my take on last 24 hours is that the major European players have moved beyond Greece. They have to manage the default and possible exit but much more importantly they need to ring fence Italy. But the SIV proposal looks a long way from the finished article and the amount of money probably not enough.

Binners - Dunno, but Branston baked beans are on Buy 1 get 2 free at Tesco 😆

Spain, Italy, Greece, Portugal and Ireland, you know, these Catholic Countries really should take more protection.

They may create a new drachma and announce a set FX conversion rate. This is unlikey to benefit holders of the new currency (in Argentina they forced conversion of $ into peso at 1:1 crippling people's savings) so they are likely to withdraw money from banks now and ship it offshore. A withdrawal of liquidity from Greek banks would be very destabilising.

There's also millions of Greeks with € mortgages and loans, converting them would be popular, unless of course you happen to own the debt 🙂

the Euro is here to stay

In name only, I'm afraid
As a concept - as soon as one country drops out because the others can't or won't support it - it's finished

Why?

I don't beleive Greece will drop out anyway but even if it did I see no reason why It should be and no one has shown me a reason why it would be the end of the euro

I got the impression this is the problem Uncle Jezza

The domino effect. If Greece leaves the Euro, there will be a bolt for the exits by Portugal, Italy, Spain and Ireland as big banks go bust, interest rates on servicing sovereign debt go through the roof, and they subsequently default too.

Resulting in utter chaos as no-one would know the true level of any individual currencies?.

Not that I'm an expert, but yesterday William Hill were giving odds of a Greek default and leaving the Euro at 11-10. Have you ever known bookies lose? And that was before todays shennanigans

but even if it did I see no reason why It should be and no one has shown me a reason why it would be the end of the euro

The Euro has already failed

Take Spain, 33% less competitive against Germany since the introduction of the Euro
So what can it do about it? can't devalue any more, all it can do is to cut wages and jobs
The Euro is stopping he Meds from taking action to strengthen their economies and it looks very much like the Euro [Germany & France] is coming to the end of their altruistic appetite.

if they do, the Euro as a concept [not a currency] is dead

Italy......gonna be ugly

From today's FT:

[b]How would Greece legally exit the eurozone?[/b]
This might require a good lawyer. Extensive as they are, the European Union treaties do not actually provide for a country leaving the eurozone. (Until now, it was taken for granted that the traffic would all be headed in only one direction).

The treaties do include a sort of emergency clause that allows the European commission, the EU’s executive arm, to make proposals to deal with extraordinary events that are a threat to the single currency. So it could probably use this as a basis to draft a Greek exit, if necessary. As with all EU matters, the process would not be immediate. The other 26 member states would have to unanimously approve, as well as the European Parliament.

Thanks to a clause in the Lisbon treaty, which came into force in 2009, Greece could take a more radical approach and opt to leave the EU altogether. (This clause was added at the behest of the UK, to prove to its eurosceptic voters that the bloc was not a straightjacket that could never be removed). In this case, Greece would require only majority approval from other member states.

But, on top of all the other acrimony, its departure would result in potentially fraught negotiations over its EU payments. Greece, for example, receives tens-of-billions of euros in development funds while its farmers harvest bumper crops of agricultural subsidies. The fate of these payments, which are programmed over several years, and other EU accounts could take some time to sort out. There would also be the question of whether a non-EU Greece would still want to maintain links to the single market, as Norway and Switzerland do.

[b]What about the banks?[/b]

One of the gravest challenges of introducing a new Drachma would be preventing a run on Greece’s banks. As soon as customers sensed such a move was in the works, they would almost certainly attempt to drain their euro accounts and move them to safer ground, such as Germany. As the crisis has worsened, Greek banks have already experienced an outflow of deposits. Changing currencies would almost certainly force the government to impose emergency capital controls to prevent a full-fledged bank run.

[b]What would happen to euro-denominated contracts?[/b]

This would be another headache of Olympic proportions. All domestic contracts – from property leases to employment contracts – would probably have to be amended to reflect the change from euros to the new currency. Far more contentious would be cross-border contracts. Companies selling goods to Greece would insist that they continue to be paid in euros while Greeks would probably try to pay in the new currency or at reduced rates. Much litigation would ensue.

If the euro is such a mess why is the pound still so weak against it.
Are we even worse than them?

because we have the ability to to take measures to manipulate the value of our currency to aid the economy - low interest rates etc.
no Euro country can do that, they have to suffer whatever rate the ecb sets for them along with any consequences

zippykona - Member

If the euro is such a mess why is the pound still so weak against it.
Are we even worse than them?

thats a point I have tried to make but been roundly ignored.

thats a point I have tried to make but been roundly ignored

in part because we have lower interest rate than the euro so it weakens the pound - why is that bad?

portugese girl at work was saying her dad wants to move all his savings to her bank account here

the run on the greek banks if they did leave would just be the start, next would be portugal, ireland, spain, italy?

im not sure it would be wise for greece to leave the euro and i think sarkomerkin knows this

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