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 il idiota, 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 trouble with that is there are no consequences. If banks can’t go bust how about prison sentences for the board instead?

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 want the euro to collapse, i think they’ve confused this with thinking it will…

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 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 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. 🙂

Greek PM to resign

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

PANIIIIIIIIIIIIIIIIIIIC!!!!!

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

… Military Junta again, other partner countries look likely to leave EU in protest, Greek membership of EU suspended, EURO nations introduce protectionist trade embargo’s against Greece – massive protest from other none Euro EU nations – Existence of EU now at risk, EU military coalition of German and Italian troops moves into Greece to restore democracy, Former Eastern bloc nations resign from EU in protest, Russia moves to protect former protectee’s from rampant German expansionism by rolling over Polish border, NATO charter invoked, US army REFORGER plan kicks into place, UK and France move to protect German Border from Russian threat, Russian submarine accidentally rams US sub protecting naval supply convoy, NATO air alliance carries out airstrikes on Russian military key points within Poland, Russian armoured forces roll into Germany approaching Fulda Gap, weakened NATO forces unable to hold at the gap and left with no option but to carry out tactical Nuclear Strike to decapitate forward columns of russion forces, Russiand respond with targetted Nuckear strikes on NATO Airbases, US responds with massive retaliatory strike on Russian military targets, Russians respond with strategic launches on US cities. 😈

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 🙂