Greece and the Euro – Is it finally gonna blow?

What do you think? They’ve been supping in the Last Chance Saloon for quite a while now, is it finally chucking-out time?

The opinion of the Chief Economist where I work (one of the ‘Big 4’ banks*) is that they’ll be out of the Euro before the end of 2012.

I know there’s a whole load of speculation and opinion amongst economists etc about this stuff, but the guy has a very reliable track record with his ‘predictions’.

(* no, I’m not a ‘banker’, I just happen to work for a bank)

they [ the people of Greece] may choose to leave rather than be held to ransom but they will not be made to leave

they [ the people of Greece] may choose to leave rather than be held to ransom but they will not be made to leave

Dare they show that much insolence? The Germans have marched on europe for less………
By the way, what have the Germans done so well that they’re so (comparatively) unaffected by the credit crunch/bankfart?

The bookies have a Greek exit before the end of the year as 6/4 on. I think its a definite!

Look at who the Greeks have just voted for? A pretty ugly selection of fascists and communists. The one thing they have in common is their desire to renegotiate the austerity package while remaining in the euro. And that isn’t an option on the table, as far as Germany is concerned. The Germans know that if they allow the Greeks to do that, then who next? Italy? Ireland? Spain? Portugal? All the above?

And there’s no way that Europes banks can absorb that kind of hit without collapsing. And that would make the Lehman Brothers collapse look like a minor little local blip. It’ll be catastrophic!!!

As of 2009 and the recent worldwide economic downturn, some analysts [3] have speculated that the German model of social capitalism is resurgent and is the most responsible economic system that still ensures the survival of the free market. With recent economic schemes and company abuses, such as in the Bernard Madoff scandal,[4] the Enron scandal, and the financial crisis of 2007–2010, the German model of a rigidly structured and regulated economy has become more attractive, as part of the financial crisis could be attributed to a lack of regulation associated with laissez-faire capitalism.

Id hope not the collapse of the greek banks would heap even more misery on the country
and the loss of bailout money see public sector wages stopped, pensions stopped,
would be chaotic in the extreme

i think they are trying to cobble together an interim coalition (excluding the nazis) to keep them going for the next few months

can they just keep doing that till the global economy picks up?

By the way, what have the Germans done so well that they’re so (comparatively) unaffected by the credit crunch/bankfart?

They made all the equipment and infrastructure that they sold to Greece, who paid for it with money they borrowed from Germany

I think, I think they’ll be back using feta by the end of this year.

By the way, what have the Germans done so well that they’re so (comparatively) unaffected by the credit crunch/bankfart?

The Germans don’t borrow as much. The Germans make things other people want to buy. FWIW their banks were very badly affected, some of the first to go down but they were already state owned.

Greece should be expelled from the euro.

By the way, what have the Germans done so well that they’re so (comparatively) unaffected by the credit crunch/bankfart?

not borrowing money they had to rely on a pay-rise to pay back.

what he ^ said.

Don’t panic!!! It’ll be ok! I’ve just read that France and Germany are having a summit about it. That’ll do it. Its worked fantastically the other 397 times they’ve done it. Yes… more diplomats swanning about in expensive limos is exactly what we need

Actually…. everything should work out just fine

As of 2009 and the recent worldwide economic downturn, some analysts [3] have speculated that the German model of social capitalism is resurgent and is the most responsible economic system that still ensures the survival of the free market. With recent economic schemes and company abuses, such as in the Bernard Madoff scandal,[4] the Enron scandal, and the financial crisis of 2007–2010, the German model of a rigidly structured and regulated economy has become more attractive, as part of the financial crisis could be attributed to a lack of regulation associated with laissez-faire capitalism.

Germany help put Europe in this mess by keeping their domestic wages and spending down artificially and selling loads of military hardware to the Greeks.

Basically Merkel can **** right off, watch the German economy implode when their exports to European nations dwindle to a slow trickle over the next few years.

^ What he says (2 up)

When they leave the Euro the new drachma will be worthless, the Greek banks and state will be bankrupt so will start printing money to pay wages etc, inflation will rise, interest rates will double at least, how is that good for Greece?

How will greeks be able to afford to buy anything, let alone germanic cars, houses etc? What will happen to current mortages etc as the drachma will be worth half of what the euro is?

Letter in the paper the other day;

SIR – My long-term partner, Helen, works occasionally (but neither hard nor long enough to my mind). She has contributed to household costs but is improvident. I have always spent wisely and put most into the kitty. Helen has run up huge debts.

Some time ago I tried to impose strict rules to curb her profligacy. Little changed and today she is defiant, blaming the lodgers we have had over the years, and pressing me to subsidise a new venture to increase her independence.

I have warned her of even less to spend if she won’t meet my economy measures. Frankly, separation looms, and might be for the best. Yet I worry about the bad example for friends and neighbours. Advice please.

Robert Stephenson
Henley-on-Thames, Oxfordshire

🙂

Yes – its absurd to think that Greece can recover with the constraint of a fixed currency and IMF imposed austerity. They key question is will Greece’s exit be orderly or disorderly and will there be a spillover into Portugal, Italy, Spain. Leaving the Euro will be painful for Greece but will the the lesser of two evils.

No chance of a Greek exit – people have been predicting it for months and will continue to do so but they will not be forced out. Instead the election of Hollande will alter the dynamic and stop the worst excess of the austerity policy

Lots of the usual suspects desperate for the euro to fail and pushing for it as wish fulfilment

They key question is will Greece’s exit be orderly or disorderly

is it actually possible to have an orderly exit?

Lots of the usual suspects desperate for the euro to fail

It’s already failed, it was supposed to equalise competitiveness throughout the member states
Spain is now 33% less competitive with Germany than it was 10 years ago

Is there a single Mediterranean country in Europe that isn’t just a banana republic?

The Eurozone should be limited to those countries North of the Alps, Pyrenees, Carpathians, etc.

Uncle Jezza. Its a car crash fella. Read any economist, they’re all saying the same thing. It not if, its when. The banks are all making contingency for the inevitable exit

Greece will have to default at some point. How can it not? You can’t watch your economy contract by 7% a year indefinitely. The only question is how much money the German taxpayer will have tipped down the money-pit by the time it does. And how catastrophic the fall out will be for the rest of us

Kimbers yes – but very difficult and not that likely. Managing the banking system deposits will be very difficult to avoid runs on the banks. There will be need for some form of capital controls to manage flight pre 20-30% devaluation. Lots of admin and legal headaches re trade terms, contracts etc. But after the hit, Greece may finally have a chance to grow. (Buy Greek exporters’ shares after the exit)

Not everyone is desperate for the euro to fail (it will do that on its own due to basic design faults), more sympathetic to the plight of the ordinary Greeks. Would you rather impose a 30% reduction in workers’ wages, TJ, or commit them to further and prolonged mass unemployment? The average Greek has been betrayed by Europe, their own political elite and the financial markets.

Austerity vs Growth is a false argument since the latter is an outcome. * With Europe’s banks still in intensive care (terminal?) there is little chance of current policies working or of Hollande pulling a magic rabbit out of the hat despite his election rhetoric.

* http://www.telegraph.co.uk/finance/comment/liamhalligan/9262086/Broken-banking-system-is-keeping-growth-at-bay.html

So who EXACTLY are Greece going to borrow money from if they leave?

Their economy is stuffed, there are no tax revenues.
Their bond prices are a joke.
The cost to Germany the Eurozone will be far greater if they leave than if Germany the Euro economies just right off Greece’s debts.
Greece owes France a shed load of cash, so the knock on if they leave will be catastrophic to France
Germany was instrumental in letting Greece into the Eurozone, so Germany could sell it’s good and services. Now the wheels have come off Germany the Eurozone has to carry the can.

Did I mention Germany had anything to do with this mess?

Nope they want to leave, but can’t.

The main issue is the current vote wranglers are promising the earth (as in reduced austerity and Euro exit) but when they get in, they will have to face reality which is basically Greece is bankrupt.

It’s already failed, it was supposed to equalise competitiveness throughout the member states
Spain is now 33% less competitive with Germany than it was 10 years ago

Guess who’s fault that is. Guess who decided that there should be rules set out by the ECB but that they shouldn’t have to follow them. The same country that has brought us major economic and social vandalism on a worldwide scale twice before. Germany.

We shouldn’t be discussing Greece, we should be discussing how to carve up Germany’s industrial heartland again for flouting the rules.

Instead the election of Hollande will alter the dynamic and stop the worst excess of the austerity policy

This would be the same Hollande that promised during the election to return France to a balanced budget by 2017, rather than the 2016 promised by Sarkozy? (in a country that hasn’t seen a balanced budget for decades!)

https://www.wsws.org/articles/2012/may2012/fran-m09.shtml

Teej you’ve still got your head firmly buried in the sand. Hollande isnt going to be dictating anything to Merkel. The French havent balanced their budget for 40yrs, they are in no position to lecture anyone.

First up it looks like there will be elections again in June at which it is going to be made clear to the Greek voters that they are now voting on an in/out European referendum. If they choose the protest vote of far left/right then thats it, they are gone from the Euro and maybe the EU. Me, personally I think the Greeks ought to leave the Euro now. Problem they have is that their economy is paper thin….they dont really produce anything.

It’s going to be up to them but they can’t continue saying on the one hand how they are sure they want to be fully part of Europe and at the same time vote for firmly anti-austerity parties.

http://www.ft.com/cms/s/0/175fcc8c-9b7f-11e1-8b36-00144feabdc0.html#axzz1umqun4UT

I’d hedge Wonga being in on lending Greece some dosh.

Afterall it’s run by a couple of Old Fogie Puppets, they’ll feel right at home.

Don’t mention interest payments.

It’s going to be up to them but they can’t continue saying on the one hand how they are sure they want to be fully part of Europe and at the same time vote for firmly anti-austerity parties.

thats not entirely fair the previous coalition only fell 2 seats short of retaining a majority?

the remaining are a mixed bunch who campaigned on a lot of issues like immigration, welfare and anti-austerity

‘Europe’, including the UK, has basically been blagging it for years and pretending that everything is going to be okay. Who knows what the answer is, but the current economic models appear somewhat unsustainable…..

One thing I will say is that I prefer the German approach to personal debt over the British one.

I’m no economist, but the Greece situation does sound fairly desperate.

I remember reading an article not long before the introduction of the Euro that suggested something along the lines of,
“unifying the currencies of very different countries such as Germany and Greece and thus preventing the setting of different levels of interest rates could cause difficulties”

Hmmmmm.

I was always opposed for such reasons, nothing jingoistic.

Has the Euro been of any net benefit to anybody yet? In 50 years time will it be considered to have been a success?

Has the Euro been of any net benefit to anybody yet?

Until recently its been a huge benefit to Germany. Its meant that the rest of Europe has effectively subsidised German Exports.

The problem was that the German Banks ended up with so much money they didn’t know what to do with it. So they lent it out willy nilly fuelling the insane property bubble in Southern Europe, particularly Spain, making the somewhat daft assumption that property prices would carry on rising forever

That’s why I said net benefit.

It appears to have been a positive blip for some followed a very deep dip…

We smug Brits can look down on mainland Europe as we rely on our faith in “The High Street” selling us Chinese goods and German cars, credit card debt and a quite a bit of financial manipulation in the city.

You can’t really eat debt, bonds or hedge funds though, especially when they all move closer to the source of the money.

Totally bloody stupid idea getting into a common financial arrangement in the first place.

Lots of failed politicians “pensioned” off to Brussels did all right for themselves…oh, and their wives!

I’m not feeling smug about any of this. The Greeks here in our our offices are properly humiliated by this and are grasping at straws, blaming the Germans and their own politicians. What infuriates me is the Panglossian “oh everything will be alright” attitude from pro-Europeans. We have our own problems but at least they’re of our own making.

I was being facetious about Brits feeling smug…

teamhurtmore – Member

Yes – its absurd to think that Greece can recover with the constraint of a fixed currency and IMF imposed austerity. They key question is will Greece’s exit be orderly or disorderly and will there be a spillover into Portugal, Italy, Spain. Leaving the Euro will be painful for Greece but will the the lesser of two evils.

^ What he said.

As I perceive it, the ONLY way this mess will get sorted is for Germany to leave the Euro.

My credentials being a failed Economics A-level, taken pre Keynesian Maggie, so I speak with utter authority.

But think about it…. Germany leaves and re-introduces the DM, the Euro is instantly devalued and those countries left in will have much smaller debts. However, the only down/up side is the effect on the the Deutsch Mark… It will be so absurdly expensive in comparison to the neighbour’s Euro’s until such time when Germany is chock full of unsold European exports (insert VW, Audi, Miele yadda yadda), at which point it too devalues, Germany crashes into recession and we can start all over again. Except this time your sacred Audi TDi will be cheap as chips 😀

Sounds like a better plan than any of the so called experts.