[Closed] Greece and the Euro - Is it finally gonna blow?

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

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?

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 [i]if[/i], its [i]when[/i]. 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 [s]Germany[/s] the Eurozone will be far greater if they leave than if [s]Germany[/s] 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 [s]Germany[/s] 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

[img] ?w=450[/img]

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 [b]net[/b] 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.

[img] [/img]

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.

Greece should just create a new country called Greece Holdings or similiar, into which they can place all the profitable parts. Then, Greece can declare bankrupt and wipe out all the debt, and Greece Holdings can step into their place seamlessly and keep doing business just like before.

France is a founding member of the united mediteranean banana republics better known as "l'Union pour la Méditerranée". Mississippi hasn't been chucked out of the dollar zone so why chuck Greece out of the euro zone?

Because the US has fiscal union and the EU hasn't.

My humble guess is that they are already printing and minting the new drachma and the banks are getting ready for when Greece leaves the Euro. The sad thing is I can see us sending food parcels to Greece before this is over. Politicians eh don't you just love em!

Because the US has [b]fiscal union[/b] and the EU hasn't.

It is the reason for the problem.

But it's not the solution.

We're too far down the road. I see the solution as being a simple right off of negative equity by the banks and property being revalued. Don't see the banks agreeing mind. 😆

Inbred456 - Member
My humble guess is that they are already printing and minting the new drachma and the banks are getting ready for when Greece leaves the Euro. The sad thing is I can see us sending food parcels to Greece before this is over. Politicians eh don't you just love em!

Stupid question probably but if Greece leaves the Euro, what happens to money they owe, bailouts etc? Debt converted to Drachma? Written off?

The US deosn't have fiscal union. Check out sales tax and property taxes in the various states.

The problem is the high interest rates poor eurolands pay, the solution is eruobonds. The UK would have similar difficulties to Greece if interest rates were as high.

The US deosn't have fiscal union.

Oh ok, I'll tip off the Wall Street Journal - someone should let them know.

[url= http://online.wsj.com/article/SB10001424052970204844504577098174205793262.html ]The Ties That Bond—and Don't[/url]

Quote :

[i]"The U.S. has a fiscal union. Through Washington, money moves from taxpayers in Connecticut to the unemployed in California with less uproar than money goes from Germany to Greece."[/i]

erm.....I think the US does have fiscal union - its called the Federal Reserve.

Interesting chatter on the news last night, Euro exit, Drachma to be reintroduced so that pensions and salaries can at least be paid but they keep paying the money they owe to the ECB/IMF in EUR. That would need another huge write-off of the principal but at least the capital markets would be open to them at some point down the line.

Edukator, I think you are referring to a uniform fiscal regime ie, the same rates if tax, whereas Ernie is referring to a union that allows fiscal transfers between states. For such a thing to happen in europe, germany etc would have to sanction greater transfers to nations they see as profligate. This is politically very unpopular.

Interesting artical in today's FT by Arvind Subramanian on how Greece could actually benefit from a devaluation after the two year hit and become the envy of the rest of Europe. Draws on experience from other countries and is a good article.

Educator, and the reason for the high interest rates is?

Have we considered the humanitarian aspect of this crisis? How will europe cope with millions of destitute Greeks crossing the borderless EU in the hope of some sort of relief?

ohnohesback - Member

Have we considered the humanitarian aspect of this crisis? How will europe cope with millions of destitute Greeks crossing the borderless EU in the hope of some sort of relief?

They are Greeks! ... the people who gives us Western civilisation so at least put them to hard labour. 🙄

Cheaper kebabs as competition throughout Europe's high streets hots up. Chilli Sauce?

Its a part of the single market - free movement of goods and people - once Germany is full it won't be so rich anymore. Lets all go and be germans.

So when the rest of the EU invokes force majoure to suspend Shenghen, ther'll be quite a shaking of the political underpinning of the EU...

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.

The book 'Boomerang' by Michael Lewis looks at the European financial crisis in some detail. ('The Big Short' focuses on Wall Street). It includes an interesting account of the Greek tendency to blame everyone else, Germans in particular, for the massive debt accumulated by Greek people. And it was mostly Greek people - individuals or small/medium companies - rather than institutions - taking all the debt on.

I find your post interesting because it seems to support the argument of the book. Apparently Greek activists are fond of the old 'turd-in-the-post' protest when it comes to the Germans enforcing a bit of discipline.

When the boot was on the other foot .................

http://www.guardian.co.uk/commentisfree/2011/jun/21/germany-greece-greek-debt-crisis

still seems to be working for the germans

[url= http://www.bbc.co.uk/news/business-18068747 ]despite all their woes the germans posted 0.5% growth and eurozone 0.2%[/url]

so how come UK plc is still doing so pants?

so how come UK plc is still doing so pants?

You need to ask?

[img] [/img]

Really binners? Havent we been "living beyond our means"? Have a look at the defecit Labour left compared to the rest of the G20. Brown and Balls stuck us in a proper hole.

mcboos right, we are in dire straights only several generations of upper class inbreeding can save us now

osborne ftw ! 😉

aaaaaaand more personal abuse. my kids go to a fee paying school, I'd love to get them into St Pauls, where Osborne (and Harriet Harman) went. Does that mean they are going to be contemptable people kimbers? Me too?

aaaaaaand more personal abuse.

Has something been deleted or am I missing something?

depends
will they hire a man they know to have been involved in hacking a murdered childs phone, making sure hes not vetted too closely for the job,
would they try and wangle an ilegal 50k donation off a russian oligarch,
will they flip their homes and squeeze an extra 55k out of the tax payer, would they claim £47 for two copies of a DVD of his own speech on "value for taxpayers' money"
would they steer the country into a double dip recession
would they lie about being photographed with a dominatrix and some cocaine?

if they did all those things then id say they were contemptable

would they lie about being photographed with a dominatrix and some cocaine?

Categorically; I'd never lie about being photographed with a dominatrix or cocaine.
Photos of me with both would be on my facebook page.

I'm going to tell my kids "everything in moderation", including paid for sex and recreational pharmaceuticals. Just as long as they dont grow up to be dreary, sanctimonious North London lefties they can do what they want.

Anyway, back (loosely) on topic;

This made me chuckle;
[img] [/img]

I'm going to tell my kids "everything in moderation", including paid for sex and recreational pharmaceuticals.

Make sure you tell them to avoid that Tory fetish involving cable and oranges though

It's not just the Tories is it?
David Blunketts dog has been tied to more bedposts than Abby Titmuss.

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

Stupid question probably but if Greece leaves the Euro, what happens to money they owe, bailouts etc? Debt converted to Drachma? Written off?

If Greece left the Euro and went back to the Drachma they'd be in control of their own currency so could allow it to appreciate/depreciate according to their needs (see Bank of England). With little or no debt and the subsequent interest payments (in foreign currency) they could potentially devalue and boost exports (if they do export anything), plus all those lovely Greek holidays would look cheap to everyone else and bolster their economy (providing the place hasn't been sold off or torn apart by civil war first).

I'd caveat all of the above with the fact that I've no idea how this stuff really works so will no doubt get shot to pieces now 🙂

FWIW I think this is largely the fault of ze Germans. The best thing for the Greek people in my opinion is to get the hell out of the Euro and go it alone. Before you know it the rest of the PIIGS will most likely be joining them anyway. The Euro is a failed experiment IMO and needs to be stopped.

LOL at Wrecker 😆

A good take on it from Steve Bell in the Guardian

[img] [/img]

Just as long as they dont grow up to be dreary, sanctimonious North London lefties they can do what they want.

ha! I moved from north london several years ago, I now live in west london 😳

Is it nice?

Is it nice?

I'd imagine its likely to erupt into flaming riots and civil unrest at any second. With desperate mobs of gun toting thugs roaming the streets and looting everything thats not nailed down, while assaulting anyone in their path?

Or did you mean Greece?

Is it nice?

Well, there's all the organic tofu you can knit..... 😉

I'd imagine its likely to erupt into flaming riots and civil unrest at any second. With desperate mobs of gun toting thugs roaming the streets and looting everything thats not nailed down, while assaulting anyone in their path?

Or did you mean Greece?

Neither Slough nor West Staines is in West London.